Co-branded credit cards to outpace traditional credit cards by 2X by FY28: Report

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Co-branded credit cards (CBCCs) are growing at a compound annual growth rate (CAGR) of 35-40 per cent and could account for over 25 per cent in terms of issuance by FY28, according to a report by consultancy firm Redseer and fintech Hyperface.

Co-branded credit cards are outpacing the traditional credit cards, driven by India’s booming economy and shifting consumer preferences, according to the report. The report titled ‘The Rise of Co-Branded Credit Cards: Redefining Customer Loyalty’ highlights that in FY24, CBCCs accounted for 12-15 per cent of the total credit cards in circulation.

Co-branded credit cards are those where one bank is the issuer of the card and a different brand serves as the customer acquisition channel. Among the popular cobranded credit cards in the country are Flipkart and Axis Bank, Amazon and ICICI Bank and Swiggy and HDFC Bank.

According to a Reserve Bank of India (RBI) data, there are around 1 million outstanding credit cards in the country.

“Credit cards are revolutionising consumer behaviour by enabling effortless spending and driving consumption. Co-branded cards have evolved from travel rewards to essential industry drivers, offering tailored value propositions that meet consumer needs and fostering loyalty through multiple card options,” said Praveena Rai, COO, National Payments Corporation of India (NPCI).

Co-branded credit cards on rise

E-commerce dominates the co-branded credit card (CBCC) landscape, commanding 75-80 per cent of all issued cards.

Following e-commerce, the travel sector holds an 8-10 per cent market share, while the dining and entertainment sectors represent 3-5 per cent of co-branded cards, making CBCCs an essential tool for fostering consumer loyalty across industries.

Notably, the average spend per co-branded credit card is 1.2 times higher than that of traditional credit cards.

The report said credit cards are emerging as the more popular payment mode for consumption expenses of Indian households. Usage of credit cards as a payment mode has doubled from 5 per cent of total personal consumption spending in FY21 to an estimated 10 per cent by FY24, it said.

The report highlights the strong impact of CBCCs on customer engagement, with activation rates reaching an impressive 70 per cent, significantly higher than the 50 per cent seen with traditional credit cards.

Survey insights reveal that 65 per cent of key decision makers believe launching a co-branded credit card is a powerful tool for increasing customer loyalty. Additionally, the survey found that 47 per cent of key decision makers view cashback offers as the primary method for fostering loyalty, while 41 per cent favour loyalty points programs.

“As CBCCs gain traction, they are poised to become a dominant force in the financial ecosystem. With continued growth projections and the evolving role of technology, CBCCs will enable brands to deliver more personalised, engaging, and rewarding experiences, shaping the future of financial products in India,” said Jasbir S Juneja, Partner, Redseer Strategy Consultants.