The partnership is a win-win situation for both companies. Partnering with Paytm will help Citi expand its financial product base given Paytm’s market dominance in India’s digital payment services market.
In a strategic move, India’s biggest digital payments firm Paytm stated it has launched a credit card with Citigroup. The move widens its financial product base while giving its banking partner an opportunity to significantly expand its credit card customer base in the country.
The move is likely to help Paytm stay a step ahead of its rivals in the fiercely competitive digital payments market in India where a host of companies, including Alphabet Inc-owned Google and Walmart-owned PhonePe, are all competing to grab a share of the digital payments pie that is projected to grow to $500 billion by 2020, according to the Boston Consulting Group.
The development is a huge opportunity for Citi to extend its retail presence across India.
Even if just 1% of Paytm’s 300 million plus customers use the new credit card, it represents a huge number, said Stephen Bird, Chief Executive, Global Consumer Banking at Citi. “We think there is a tremendous potential for growth of this partnership”.
Following a demonitization of high-value currency notes in 2016, Paytm has become a household name across India.
Paytm’s parent One97 Communications counts Japan’s SoftBank Group, Alibaba and Berkshire Hathaway among its investors.
The Paytm First Card will offer 1% cashback on all transactions, unlike reward points offered by most rival credit cards in India.
“We understood that there is a set of the customer base or customer needs that get fulfilled when you have a credit card or card in the hand,” said Vijay Shekhar Sharma, founder and CEO of One97 Communications. “That is why we had launched a debit card of our bank and today we complete our offering with a credit card partnership with Citibank.”
Sharma, a self-made billionaire, said his firm is targeting “urban aspirational users who are first-time credit users”.