Fintech Giants Push Co-Branded Credit Cards

With the Unified Payments Interface (UPI) continuing to offer zero-merchant-discount-rate (MDR) transactions, major fintechs are exploring credit products as alternative revenue sources. This includes a focus on co-branded credit cards, personal loans, and gold loans.

Key Developments:

• Google Pay is developing a co-branded credit card with Axis Bank, after previously launching:
  • Gold loans in partnership with Muthoot Finance
  • Personal loans ranging from ₹30,000 to ₹10 lakh (tenure: 6 months to 6 years)
• PhonePe, India’s top UPI app, has launched a co-branded credit card with HDFC Bank.
• Amazon already operates a popular co-branded ICICI Bank card with over 5 million users and is exploring an NBFC license via Axio (formerly Capital Float).

Fintech Revenue Strategy

• Fintechs earn commissions for sourcing credit customers for partner banks:
  • Credit card sourcing: ₹1,000–₹1,200 per customer
  • Personal loan commission
  • Gold loan commission
• These credit partnerships also:
  • Boost user engagement on the fintech platforms
  • Open cross-selling channels across a wide customer base

Implications for the Fintech Ecosystem

• The shift marks a diversification from pure payments to credit-led monetization amid regulatory pressure on free UPI.
• It underscores the growing convergence between big tech and banking, especially in India’s fast-evolving digital finance sector.

TET