According to research, customers reach out to credit cards when the ticket size is large. Youngsters use debit cards when the ticket size is small. That is a reason why we went for credit cards. This is true for even e-commerce platforms. Credit cards are here to stay.
Federal Bank recently launched its credit card and has US-based Fiserv as its technology partner to enable digitisation of its end-to-end card issuance and processing cycle. Shalini Warrier, executive director of Federal Bank, speaks to Rajesh Ravi about cards and future plans. Excerpts:
What is the current status of the credit card launched by the bank?
We launched our credit card in May. We started with our staff and then in June, we started issuing them to our customers. It is a complete digital product with no paperwork involved. We had gone in with an exclusive partnership with Mastercard. Unfortunately, they had a restriction placed on them by the RBI and we stopped issuing cards in July. We are currently working with Rupay and Visa to certify ourselves. We will be back issuing cards by mid-September.
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Do you have any target in numbers for the credit card ?
In numbers, currently, we are around 25,000 and geared to upscale. There is immense potential in our existing customer base itself. We have around 80 lakh debit cards, and the typical ratio in the market is that for every 10 debit cards, there is one credit card. Building card numbers is easy, but there are risks from both the credit and technology sides. We want to take it in a gradual manner.
Federal Bank is one of the few in India to enable tokenization with Google Pay.
The most important thing is that you can just tap and pay. You don’t have to take out your credit card or debit card. We are the first bank to enable tokenisation with both Visa and Mastercard. It is a safe and secure system for customers and you don’t have to store your card number. Literally, it anonymizes card numbers and reduces the risk of leak.
Buy now pay later (BNPL) is gaining acceptance across the world. Where does the bank stand regarding this?
We are one of the few banks that offer debit card EMI products. We now offer it to our existing customers. We have not gone to new-to bank customers, and will do that in near future.
Fiserve is your technology partner for credit card. Do we see new products from this tie-up?
We are working with them and their technology platform is very advanced. It is a long-term partnership. There are so many innovations in the credit card sector and they have a very agile technology. We are working with them on the credit card EMI facility, balance transfer facility, etc.
The bank is launching a credit card when youngsters are moving to fintech platforms.
Penetration of credit cards in the Indian market is still very low. According to research, customers reach out to credit cards when the ticket size is large. Youngsters use debit cards when the ticket size is small. That is a reason why we went for credit cards. This is true for even e-commerce platforms. Credit cards are here to stay.
Are you planning any new technology-based products for your customers?
We have a promising partnership with two neobanks – Fi and Jupiter. Youngsters who are digitally native, the salaried millennial who wants all the convenience of the banking and at the same time wants the safety and security of a bank are best served through collaboration with our fintech partners.