Co-Branded Credit Cards Set to Dominate Market with 35-40% CAGR, Outpacing Traditional Cards by 2X by FY28 : Redseer-Hyperface Report
INDIA, Mumbai, August 27, 2024: Co-branded credit cards (CBCCs) are rapidly outpacing traditional credit cards, driven by India’s booming economy and shifting consumer preferences. According to a new report titled “The Rise of Co-Branded Credit Cards: Redefining Customer Loyalty” by Redseer Strategy Consultants, in collaboration with Hyperface, Asia’s First Credit Cards as a Service (CCaaS) platform, CBCCs are not just a trend—they are reshaping the future of consumer finance with an expected growth of 35-40% CAGR from FY 24-28.
As consumers increasingly seek personalized financial products, co-branded credit cards have emerged as a key driver of engagement, offering tailored rewards and exclusive benefits through strategic partnerships between banks and brands. The report highlights that in FY24, CBCCs accounted for 12-15% of total credit cards, with projections showing this share could exceed 25% by FY28. This growth trajectory is twice as fast as that of traditional credit cards.
As the first comprehensive analysis of the co-branded credit card market—still in its early stages—this report distinguishes itself by blending primary insights of over 100+ key decision makers along with secondary data.
“Credit cards are revolutionizing consumer behavior 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, NPCI.
E-commerce dominates the co-branded credit card (CBCC) landscape, commanding 75-80% of all issued cards, with the Amazon Pay ICICI Bank and Flipkart Axis Bank Credit Cards leading the charge, collectively accounting for approximately 9 million cards. Following e-commerce, the travel sector holds an 8-10% market share, while the dining and entertainment sectors represent 3-5% of co-branded cards, making CBCCs an essential tool for fostering consumer loyalty across industries.
The report highlights the strong impact of CBCCs on customer engagement, with activation rates reaching an impressive 70%, significantly higher than the 50% seen with traditional credit cards. This success is largely driven by cashback offers and loyalty points programs, which have emerged as the most effective strategies for boosting customer retention. Survey insights reveal that 65% 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% of key decision makers view cashback offers as the primary method for fostering loyalty, while 41% favor loyalty points programs. These findings underscore the importance of direct financial rewards and points-based incentives in retaining and engaging customers, making them essential components of a successful co-branded credit card strategy.
The Role of Technology and CCaaS Platforms
Credit cards have undergone a significant transformation, shifting from traditional one-size-fits-all offerings to more customizable and personalized solutions, a change driven in large part by the innovations of Credit Card as a Service (CCaaS) platforms. CCaaS platforms are revolutionizing the co-branded credit card ecosystem by providing businesses with the tools and infrastructure to launch and manage customized credit card programs quickly and efficiently. These platforms are bridging the gap between technology and finance, offering seamless integration, advanced analytics, and enhanced customer engagement, that is enabling businesses to provide flexible, quick-to-market credit card solutions that can be seamlessly integrated into existing digital experiences.
According to the report, 60% of key decision makers identified seamless bank partner integration as the primary advantage of collaborating with a CCaaS platform. This was followed by 52% who highlighted access to advanced technology and 50% who pointed to enhanced customer experience and engagement as key benefits.
“India’s economy has undergone significant transformation in recent years, driven by rapid digitization and increased consumer spending. This has led to the rise of co-branded credit cards (CBCCs), which combine the strengths of financial institutions and partner brands to offer tailored benefits and enhance the value proposition for consumers. 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 personalized, engaging, and rewarding experiences, shaping the future of financial products in India”, said Jasbir S Juneja, Partner, Redseer Strategy Consultants.
“CCaaS platforms are reshaping the co-branded credit card ecosystem by providing the infrastructure for brands and banks to launch and manage credit card offerings with unprecedented ease and flexibility. As pioneers of this technology, we are seeing firsthand how it is revolutionizing the industry by enabling the development of innovative and customizable solutions tailored to the evolving needs of consumers. The integration of deep tech into the credit card landscape enhances operational efficiency and paves the way for more personalized financial products that foster deeper customer engagement and loyalty. As the industry evolves, technology remains the cornerstone of this transformation, enabling a more dynamic and connected financial landscape”, said RV Ramanathan, CEO and Co-founder of Hyperface.
About Redseer Strategy Consultants
Redseer Strategy Consultants is a leading strategy consulting firm that has been at the forefront of shaping the new age business landscape in India for the past 15 years. Redseer’s relentless focus on innovation, deep consumer understanding, and strong entrepreneurial mindset have established it as the go-to advisory firm for new-age consumer-focused businesses. Redseer is the # 1 advisor to new-age firms planning IPO strategy, a leading advisor to PE on making the right investment calls and works closely with the founders and board on long-term sustainable businesses. Redseer and its partner OC&C with over 1000+ consultants, create a positive impact on their clients from 22 cities across 5 continents.
About Hyperface
Hyperface is the Definitive Credit Cards Innovation Platform that is revolutionizing the way banks, brands, and fintechs approach card solutions. As Asia’s first Credit Cards as a Service (CaaS) platform, Hyperface provides businesses with the technology to launch, manage and scale their own credit card programs. From program design and development to risk management and compliance, Hyperface empowers banks and co-brands to deliver exceptional, digital-first card experiences that resonate with modern consumers.
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