Visa says co-branding offers opportunities for new categories to emerge

Visa has an estimated 60 percent of the market share in India – about two-thirds of the volumes on credit and debit cards. It has issued almost 300 million cards through various banks. Over the past couple of years, it has also issued cards through fintech partnerships.

In an interview with Moneycontrol, Sujai Raina, VP and head of business development for Visa in India, talked about the spending patterns of credit card user’s before and after the pandemic, an increase in the number of co-branded cards, and customer preferences while choosing a card. Edited excerpts:

How have the spending patterns of credit card users changed since the pandemic?

We have witnessed a significant shift in spending patterns between face-to-face and e-commerce transactions. Prior to the pandemic, 60 percent of spending was face-to-face, while 40 percent was through e-commerce. However, our data indicates that this pattern has nearly reversed since the pandemic. Despite this shift, credit card spending still remains prominent in e-commerce, lifestyle categories, dining, travel, and utility payments. Customers are also utilising credit cards to pay for house rent and education expenses.

Why is there an increase in the number of co-branded cards?

Over the past five years, the proportion of co-branded cards has increased from one in 10 to one in three new cards. Visa has played a significant role in driving this evolution by helping issuers assess market segments through spending data and patterns flowing through our network. Our approach involves identifying untapped opportunities and collaborating with both merchants and issuers to create best-in-class customer value propositions and working to optimise these co-branded programmes post-launch to ensure win-win outcomes for the merchant, the issuer bank and Visa.

We have witnessed co-branding in sectors such as airlines, retailers, grocery chains, and more recently, in e-commerce. This trend has allowed large conglomerates and fintech companies to enter the co-branded space by partnering with banks to issue cards. The co-branding segment continues to offer opportunities for new categories to emerge, driving salience, stickiness, revenue options, market share, and expanding credit availability.

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Which Visa card features have contributed to high market share?

In our annual brand health surveys, the Visa brand consistently emerges as the most preferred brand across all segments of card users, including the affluent, mass affluent, and millennials. We offer different platforms like Platinum, Signature, and Infinite to cater to various socio-economic segments. These platforms provide exclusive benefits and privileges to cardholders, such as dining discounts, lounge access, and international hotel stays, depending on the card variant. Additionally, our expertise in fraud mitigation, chargeback and dispute management, and customer support are critical elements that contribute to Visa's brand preference.

Are regulatory guidelines stringent in India compared to other developing countries?

Given the uncertainty caused by the pandemic and other geopolitical events, the Reserve Bank of India is to be commended for effectively managing the payments ecosystem. India has experienced a stable payments ecosystem without any significant crises for many years, thanks to the RBI's initiatives. Their focus has been on ensuring the sanctity of the ecosystem, protecting cardholders, and ensuring that all parties involved understand their rights, obligations, and responsibilities.

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In the last 12 to 18 months, the regulator has taken several steps to enhance security and safeguard customer interests. This has created an environment where networks like Visa can bring their capabilities to drive the same agenda, including innovations like contactless payments. The regulatory guidelines not only provide stability but also open avenues for players to innovate and improve the consumer experience, as demonstrated by the tokenisation guidelines.

Credit card lenders offer deep discounts on purchases, rewards, cashback, air miles and more. How should users avoid falling into debt traps?

The marketing of credit cards, like any other product, involves offering customers incentives in the form of discounts, rewards, and other benefits to drive usage and consumption. It's crucial for customers to be aware of how to use credit cards responsibly. This means understanding annual fees, interest charges, payment due dates, penalties for late payments, and the implications of not paying in full by the due date on one’s credit history.

The card issuer provides full transparency regarding terms, fees, and charges, so it's essential to familiarise yourself with them before using a credit card and take necessary precautions to avoid falling into debt.