Cobranded credit cards to garner 25% of market by FY ’28

India is expected to witness a strong growth in co-branded credit cards, which will likely to be driven by attractive rewards, strategic partnerships, and exclusive deals. Currently, cobranded credit cards hold a market share of 12-15%. Approximately 75-80% of cobranded cards are issued through e-commerce partnerships.

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Cobranded credit cards are those where a bank issues the card, but a different brand handles customer acquisition. They are on track to become a major segment of the Indian credit card market. Projections indicate that they will represent 25% of issuances by the end of FY ’28. This is a significant increase from their current market share of 12-15%.

According to a report by fintech startup Hyperface and consultancy firm Redseer, cobranded cards are expected to grow at a compound annual growth rate (CAGR) of 35-40%, compared to the 14-15% growth anticipated for traditional credit cards.

RV Ramanathan, chief executive officer Hyperface noted, “On the credit card line of business they make more money on riskier lending, but excess risk will spoil the book, hence banks will need to draw a fine line between risk and rewards for their credit card business.”

Currently, there are about 1 million outstanding credit cards in India, but the Reserve Bank of India (RBI) does not provide specific data on the market share of cobranded cards. These cards are issued by banks but are marketed and acquired through partnerships with brands, such as Flipkart with Axis Bank, Amazon with ICICI Bank, and Swiggy with HDFC Bank.

The rising popularity of credit cards for household expenses is evident, with their usage doubling from 5% of total personal consumption spending in FY21 to an estimated 10% by FY24. Cobranded cards benefit from higher activation rates (70% versus 50% for traditional cards) and higher average spending (1.2 times more). The growth is largely driven by attractive rewards, strategic partnerships, and exclusive deals. Approximately 75-80% of cobranded cards are issued through e-commerce partnerships.

Despite the positive outlook, the RBI has imposed stricter regulations on cobranded credit cards, including tighter data security norms, mandatory customer disclosures, and limiting the cobranding partner’s role to marketing and customer acquisition. This regulatory tightening aims to ensure a controlled and secure expansion of the sector.