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Paytm, India’s largest mobile wallet app, has branched out to several businesses in recent years. On Tuesday, it added another category to the list: credit cards.

The firm, operated by One97 Communications, today unveiled Paytm First Credit Card with lofty benefits as it races to bulk up its financial offerings. The cards, issued by Citi bank, will be the first in the country to offer unlimited, one percent cashback on purchases, Paytm claimed in a statement. The company is hoping to rope in about 25 million credit card customers in the coming months.

The penetration of credit cards remains very low in India with under 50 million people possessing one. With people conducting most of their businesses through cash in the nation, banks have little understanding of a customer’s credit history and score. And it also doesn’t help that banks in India are still wary of issuing credit cards to those who don’t perfectly fit the traditional blue collar job.

But why is a company that made its name through a mobile payment wallet open to its customers engaging with credit card companies? Paytm itself is struggling to grow its business. Its ecommerce business Paytm Mall remains tiny despite bleeding money. And payments itself has become a commoditized space with wallet services playing catch up to well-funded apps such as Flipkart-owned PhonePe and Google Pay that are built on top of UPI, a government-backed infrastructure.

It is still positioned to do well in the credit cards space. Paytm, with more than 200 million active users, rivals banks on both the number of customers and volume of transaction it processes. “Our new offering is designed to bring utmost flexibility to our customers in their digital payment options and will help spur large-ticket cashless payments,” Vijay Shekhar Sharma, chairman and CEO of One97 Communications said in a statement.

Backed by SoftBank, Alibaba, and most recently Warren Buffett’s Berkshire Hathaway, Paytm also has the capital to spur the adoption of its new credit card. As part of the package, Paytm’s credit card holders will be able to avail dining, shopping, travel and other offers that Citi bank provides to its privilege customers. In the first four months of issuing a card, the company will offer its customers discounts worth Rs 10,000 ($142) on spending of Rs 10,000.

Paytm First Credit Card will work both in India and elsewhere and support contactless transactions. Like any other credit card, customers will be able to pay back a sum in multiple monthly instalments. Paytm First Credit Card will charge users a nominal fee of Rs 500 ($7.1) that will be waived off if their spendings through the card exceeds Rs 50,000 ($710) in a year.

Paytm’s foray into credit cards business comes as it has been trying to expand its financial services offering. In recent years, it has launched a digital payments bank, and has started to offer prepaid Forex cards for international purchases. It also lets customers buy gold, and employers issue food allowance wallets for their staff.

Earlier this year, the company launched Paytm First, a subscription bundle that includes access to subscriptions from other services such as Zomato, Uber, Gaana, and Eros Now. In an interview with TechCrunch late last month, Paytm’s Sharma said payments is the moat around which you can build a number of services. “Now that’s a business model… payment itself can’t make you money.”


https://techcrunch.com/2019/05/14/indias-mobile-wallet-company-paytm-now-offers-a-credit-card/
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