Co-branded credit cards most sought after, average spend per card grows to Rs 5577

Rewards and convenience will remain the buzzword, and cards that are conveniently available digitally will be the most sought after in 2024

Co-branded cards continued to be the flavour of 2023, as banks and fintechs increasingly partnered to come up with innovative products in a time of shrinking rewards, reveals data compiled by BankBazaar. 

These trends were amply supported by RBI policies that allowed customers to choose their network provider and saw credit cards expand to UPI.

 A co-branded credit card is issued by a bank in association with a second party which could be a retail partner, travel website, sports league or a premium hotel chain. A co-branded credit card is sponsored by both entities and is designed to carry features from both. Depending on the partner, the bank has tied up with, customers can enjoy benefits while making purchase transactions.

"“A co-branded credit card is a partnership between a bank and another company. This partnership lets the company's customers use a credit card that's backed by the bank. These cards show both the bank's and the company's logos and offer rewards or points specific to that company. By teaming up, banks can give these cards to the company's customers and get new customers too. Banks and FinTech companies are teaming up to introduce salary cards for businesses, aiming to streamline how companies handle their employees' expenses digitally. Banks are also rolling out joint cards with other brands to help customers handle their money smartly," said Shetty.

Fuel and airline credit cards are some of the sought-after common co-branded credit cards where rewards points can be redeemed for air miles, flight awards, products and class upgrades. For example, in 2023, HDFC Banks partnered with Marriot Bonvoy, Swiggy, IRCTC Indian Oil and Tata Neu to offer co-branded credit cards while SBI  tied up with IRCTC, Air India, BPCL, PayTM, and Etihad in the co-branded-credit-card segment.

Industry data gathered by Business Standard revealed that the Flipkart Axis Bank credit card has already seen more than three million customers in the first half of 2023.

For Amazon loyalists, the Amazon ICICI Credit Card is the most sought-after since it is a lifetime-free credit card. It provides 5% cashback on purchases done by Amazon Prime Members on Amazon. It offers 3% cashback on purchases done by Amazon Non-Prime Members on Amazon.

The ICICI Bank Amazon Pay card has already attracted over four million customers, boasting excellent activation rates and spending per active customer.

Among other popular co-branded cards are the IRCTC SBI card, HDFC Rupay card, HDFC Dinners ClubMiles and Regalia, RBL Bankbazaar cobrand card, and Finbooster, favoured by customers.

In 2023, credit card dues grew to Rs 2.4 trillion,  as the number of credit cards outstanding crossed 94.7 million in October. n tandem, credit card spending surged to record levels, hitting Rs 1.79 trillion. Average spends per card grew to Rs 5577 from Rs 5052 last year – an increase of 10.4 per cent year on year. 

Online spends per card grew 11.6% over the last one year to hit Rs 7532, up from Rs 6,750, revealed the Bankbazaar report titled 'Moneymood 2024'.

2024 Expectations

 "With Rupay cards now available on UPI, it is only a matter of time before other networks also get to leverage UPI. Credit cards will continue to remain the preferred instrument for larger spends, and the average spends are set to rise, with economic growth projections being revised upwards," said Adhil Shetty, CEO of Bankbazaar.

Rewards and convenience will remain the buzzword, and cards that are conveniently available digitally will be the most sought after, the report revealed. 

Collaborations between fintechs and banks will continue to draw a larger segment of new users with tailor-made rewards and benefits, it said.