Authored by Rajeev Kumar K
In the past few years, there has been tremendous growth in the digital payments’ space in India as consumers and merchants have experienced the convenience and safety of digital adoption.
Amidst the growing acceptance, co-branded cards have emerged as an effective way to cater to the Indian audience who love to invest in their areas of interest like shopping, dining and in time, travel. These cards are issued basis a partnership between a leading merchant and an issuer bank and typically sport the logos of the bank and the merchant on the card. These co-brand cards offer very attractive merchant-specific benefits including high cash backs, special rewards, discounts, EMI’s to brand-loyal consumers that result in strengthened brand preference and influence buying choices.
Using a co-branded card is considered a “smart way” of purchasing as the consumer earns exclusive cash backs, discounts and other rewards for each transaction with the brand. While using a co-branded card, a consumer is well aware that apart from the upfront cash backs and discounts the spends will help accumulate valuable loyalty points that can be redeemed for varied discounts and offers.
The hassle-free redemption process encourages consumers to come back for more and build a long-term relationship with the brand. Cardholders are also rewarded for purchases at non-partner brands, as the reward points on the purchase will accrue and can be redeemed against a purchase made with the partner brand.
Earlier, co-branded cards were popular only in credit cards but with the advent of new use cases like transit, meals and air travel, card issuers are coming up with co-brand prepaid and debit cards as well.
Banks are also associating with public services like metro and bus authorities to issue co-branded prepaid / debit cards which enable citizens to use public transport by paying through the same card that they use for shopping or making payment at any other store. Co-brand prepaid and debit cards also serve customers that do not qualify for co-brand credit cards due to various reasons.
The festive season in India has just started. Until last year, the season majorly meant family get-togethers, home-cooked food, vacations and tons of shopping. Despite the diverse geographies, people used to go on a shopping spree as the month-long festival period was considered auspicious for making new purchases. However, this year, the ongoing pandemic and the resultant lockdown has a profound effect on individuals with loss of jobs and pay cuts along with extravagant prices of consumables.
The consumer sentiment towards shopping for non-essential products and goods has been low since the beginning of the lockdown. To encourage sales by making products more affordable for consumers and uplift consumer sentiment, merchants and brands are partnering with banks to come up with strategic co-branded cards. Mastercard has been the global leader in the co-brand card space.
The global legacy and experience in co-brand space enable Mastercard to co-create distinct consumer value propositions along with the partner merchant and issuer bank. As digital shopping becomes consumers’ primary choice this festive season, they can experience several lucrative cashback deals, exclusive discounts and other loyalty benefits on various co-branded card programs by Mastercard including the Flipkart Axis Bank card, Ikea Citi Bank card, Indigo HDFC Bank Card, Vistara SBI card, Zomato RBL Bank card and many more.
Co-branded credit cards usually register 2-7 times higher spending as they attract consumers with an affinity for spending in certain growing categories. Since every single co-branded card has an attractive reward program, the important question is whether the card has the right mix of hard benefits and soft benefits to drive additional sales.
It is said, if the co-branded card(s) are selected appropriately and used well, it can significantly reduce the purchase cost for a consumer through cash backs, reward points, discounts, free vouchers, complimentary tickets and a plethora of other lifestyle benefits such as complimentary access to various airport lounges and golf courses. One must ensure that they opt for the right co-branded card to maximize benefits and reduce cost and remember to always redeem the accumulated reward points and free vouchers before they expire
Rajeev Kumar K is Senior Vice President, Market Development, South Asia at Mastercard. Views are personal