HDFC Bank targets 1 million new credit cards through Shoppers Stop tie-up

HDFC Bank is targeting the acquisition of 1 million new credit card customers over the next three-four years through a co-branded partnership with retail chain Shoppers Stop, the bank said on Wednesday. The tie-up is among a series of launches by the bank after the lifting of a regulatory embargo on fresh credit card issuances in August 2021, and is being seen as its answer to ICICI Bank’s partnership with e-commerce biggie Amazon.

HDFC Bank, the largest player in the credit card space, had an outstanding credit card base of 16.3 million in February 2022, while ICICI Bank had 12.8 million cards, stated data from the Reserve Bank of India (RBI). Analyst estimates peg the share of Amazon Pay cards in ICICI Bank’s total card base at about 17% as of December-end 2021.

Spends coming from non-bank partnerships currently stand at around 15% for HDFC Bank, said Parag Rao, country head – payment business, consumer finance technology and digital banking.

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

The retail category contributes about 10% to card spends, Rao said. The Covid years have reconfigured the contribution from different categories, with the travel segment, earlier a major contributor, having fallen off. Now, categories like durable purchases and daily needs, which constituted a fragmented segment earlier, have become a large category. Apparel and eating out have been picking up over the last three-four months. “Hopefully from what we see and hear, travel, airline booking and hotels are making a comeback,” Rao said.

HDFC Bank has already got alliances with airlines, retailers in the fashion space and in the general category space. It is now looking at categories like digital-only cards, a partnership with a large telecom player and another with a large diversified multi-portfolio conglomerate. The lender will also look at few focused digital-only partnerships in the dining and local mobility categories, among others. “While we may be strong in many (segments) there may be some which we believe have future potential and areas we can leverage with our partners,” Rao said.

He further said the problem of higher levels of stress in the retail segment is now abating. “For us also, there was some elevation, but never ever too worrying or so. I think that has also gone. The way I see it at a very high level, I think this is a good time for growth happening over the next 18-24 months,” Rao said. According to him, a large part of the problems brought on by the pandemic are gone and customers who are still in the market for loans are good customers from a relative risk perspective. 

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