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Credit cards get multi-brand fix

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Credit cards get multi-brand fix

After ICICI Bank, American Express ropes in new partners.

Move over co-branded cards. Multi-branded cards are here. Commercial banks are now converting their co-branded pieces of plastic into multi-branded cards to widen their customer base.

ICICI Bank launched its second multi-branded card in Delhi last week. American Express, too, launched its first multi-branded card this month. The State Bank of India has identified partners to expand their brand coverage and is expected to launch such cards soon. Standard Chartered Bank and HSBC, too, are drawing up plans to launch similar cards.

The objective is to prop up credit card spending. The spend on a co-branded card compared with a vanilla card is higher, upwards of 30 per cent, depending on the utility and the frequency of use. It will go up further in a multi-branded card depending on the partner that a bank ropes in.

The incremental spend on an airline co-branded credit card is thrice that of a vanilla card as the amount paid for an air ticket is very high. A co-branded card with a mobile or a fuel company normally leads to 30 per cent higher spending.

"It is crucial to identify the right partners for such multi-branded cards," points out ICICI Bank's Joint General Manager B Madhivanan. Banks do look for segment synergies in multi-operational cards and do not just rope in partners.

ICICI Bank last week launched a multi-operational credit card that involved HPCL and Airtel. The bank has a similar arrangement with Apollo Hospital and National Insurance Corporation. Now, it wants to convert its co-branded credit card with retail chain Big Bazaar into a multi-brand card by roping in another mobile phone partner to make it a complete package.

SBI Cards, which launched a co-branded card with Lifestyle International, is now in the process of finalising agreements with malls, hotel chains, telecom companies and jewellery outlets to offer its customers a multi-branded card.

SBI Cards' CEO Roopam Asthana says, "The problem with a single branded alliance is that card use outside the anchor brand's outlets is extremely low. This weakens the profitability of a single branded card model."

Travel cards major American Express and Club HP roped in ICICI Lombard into their existing tie-up to offer customers the convenience of paying their motor insurance premium or buy petrol using the same card.

Explains American Express' Vice-President and Country Manager KL Muralidhara, "We are certainly looking at adding a few more players into our existing co-branded card with Club HP. These players will be a retail chain, an automobile maker, and a tyre company."

Other foreign banks like Standard Chartered and HSBC are also contemplating emulating this model. Standard Chartered Bank's CEO of the India region Neeraj Swaroop says, "We will look at this proposition as and when we identify the right partners."


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