HDFC Bank targets 1 million new credit cards with Shoppers Stop combination

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HDFC Bank is aiming to acquire one million new credit card customers over the next three to four years through a co-branded partnership with retail chain Shoppers Stop, the bank said on Wednesday. The tie-up is part of a series of launches by the bank following the lifting of a regulatory embargo on new credit card issues in August 2021, and is seen as its response to ICICI Bank’s partnership with the trading giant Amazon electronics.

HDFC Bank, the biggest credit card player, had an outstanding credit card base of 16.3 million in February 2022, while ICICI Bank had 12.8 million cards, according to data from the Reserve Bank of India (RBI). Analysts estimate that the share of Amazon Pay cards in ICICI Bank’s total card base is around 17% at the end of December 2021.

Spending from non-banking partnerships currently stands at around 15% for HDFC Bank, said Parag Rao, Country Manager – Payments Business, Consumer Finance Technology and Digital Banking.

“Over the next two or three years, I expect it to grow by around 25-30%. That’s around 12% by number of our cards in circulation for existing co-brands like Indigo, InterMiles, Times Card, among others,” Rao said. As more launches take place, the bank expects co-branded cards to represent 35-40% of its total card base over the next two to next three years.

The retail category contributes about 10% of card spend, Rao said. The Covid years have reconfigured the contribution of different categories, with the travel segment, previously a major contributor, having fallen. Now, categories like sustainable shopping and daily necessities, which used to be a fragmented segment, have become one big category. Clothing and eating out have picked up over the past three or four months. “Hopefully from what we’re seeing and hearing, travel, airline bookings and hotels are coming back,” Rao said.

HDFC Bank has already entered into alliances with airlines, fashion and general category retailers. He is now looking at categories like digital-only cards, a partnership with a major telecommunications player and another with a large diversified multi-wallet conglomerate. The lender will also consider a few digital-only partnerships in the restaurant and local mobility categories, among others. “While we may be strong in many (segments), there may be some that we believe have future potential and areas that we can leverage with our partners,” Rao said.

He further stated that the problem of higher stress levels in the retail segment is now easing. “For us, too, there was some uplift, but never too worrying or otherwise. I think that’s gone too. From how I see it at a very high level, I think it’s a good time for growth to happen over the next 18-24 months,” Rao said. According to him, much of the problems caused by the pandemic have disappeared and the customers who are still in the loan market are good customers from a relative risk point of view.

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