Ola and Flipkart may launch co-branded credit cards soon


Betting big on the next frontier of digital payment, ride-hailing app Ola and e-commerce marketplace Flipkart are set to launch credit cards in association with large banks.

The move will not only give these companies insight into the spending pattern of their card users but at the same time help them enter an under-penetrated credit market, says a report appearing in ET.

It is likely that Ola shall partner with State Bank of India (SBI) to come up with the credit card. The pilot for the same is expected to begin next week and the company reportedly plans to issue 1 million cards in the first year, leveraging its 150 million customer base.

Entrackr in May last year had exclusively reported that Ola had put in place an internal team to look into the launch of the credit card. The enthusiasm with which the Millennials had taken to Ola Credit had pushed the company to think of having full-fledged credit cards for its customers.

Typically in a partnership such as this, a bank handles risk analysis, card issuance, payment processing, credit line management and statement processing, while the merchant partner controls marketing, promotions and discounts. This will help the merchant company to structure the rewards in such way that it gets a peep into spending pattern of the customers.

It may safely be presumed that the rewards offered would then be alluring enough for customers to go for the credit cards.

Credit card collaboration shall help the internet companies map the transaction history of the customer, scan their offline spends, push increase spending on their stores by bundling it with rewards and over time have a better assessment of their paying capacity.

Similarly, Flipkart too is evaluating data points to gauge a customer’s ability and intent to repay loans. A top executive of Flipkart is reported to have said the company is likely to launch this card in collaboration with Axis Bank or HDFC Bank later this quarter.

The development, however, has not been confirmed by either of these companies.

However, both Ola and Flipkart would be following the trend set by Amazon which had tied up with ICICI Bank to launch a co-branded credit card, which offers customers added rewards and benefits on the Amazon India ecosystem.

Credit card partnerships are equally beneficial for banks as they get access to a large number of new customers at a relatively low cost. The merchants get know the offline spend of the customers. A combined database will unleash immense possibilities for both. Hence the ecosystem in the present environment is only expected to grow and flourish.

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