The co-branded credit cards market is experiencing an impressive surge, propelled by digitalization and evolving consumer preferences in India. In collaboration with Redseer, Hyperface has released a report detailing the growth in market share for co-branded credit cards, which has risen from 3-5% in FY20 to 12-15% by FY24. RV Ramanathan, Co-Founder and CEO at Hyperface, sees even more significant growth on the horizon. He predicts that co-branded credit cards could capture over 25% of the market by FY28, expanding at an annual growth rate of 35-40%. In contrast, traditional credit cards are projected to grow at a slower pace of around 14-16% CAGR, highlighting the rapid adoption of co-branded options.
Drivers Behind the Popularity of Co-Branded Credit Cards
According to Ramanathan, the appeal of co-branded credit cards among younger consumers goes beyond simple rewards. Modern consumers, especially younger generations, increasingly seek ways to connect with brands that reflect their values and lifestyles. Co-branded cards cater to this need by offering exclusive, customised reward programs that align with individual spending patterns.
These cards typically offer perks like VIP experiences, exclusive access to events, and tailored discounts, making them appealing to those who value unique benefits over generic rewards. Additionally, co-branded cards often focus on small, frequent purchases, offering streamlined experiences and making them an ideal option for individuals new to credit cards. This focus on usability and brand connection has helped drive consumer interest to new heights.
Sectors Driving Growth: Travel, Dining, E-commerce, and Groceries
Consumer demand for co-branded credit cards is reaching unprecedented levels, with notable interest in travel, dining, e-commerce, and grocery sectors. Ramanathan highlights that over one-third of new credit cards issued in FY24 were co-branded. Initially popularized for fuel purchases, co-branded cards have expanded across various sectors, especially retail and hospitality, where loyalty benefits and frequent spending patterns align closely with consumer needs.
The travel sector, for example, often pairs with banks to provide airline-specific perks, such as discounts on bookings, miles, or exclusive access to airport lounges. Similarly, dining and e-commerce partnerships leverage loyalty points, and cashback offers that attract customers, helping co-branded cards become a preferred option for everyday spending.
Banks and Brands: The Power of Strategic Partnerships
The growth of co-branded credit cards in India hinges on strong partnerships between banks and brands. Both parties aim to attract the right customer demographic and build brand loyalty. Ramanathan explains that banks choose brands that align with their customer value proposition (CVP) and enhance their credibility in the market.
According to a survey, 71% of industry respondents believe aligning brands and banks is essential for a successful co-branded program. Such partnerships also offer opportunities to expand beyond Tier 1 cities, enabling banks and brands to tap into new markets and increase customer reach.
Co-Branded vs. Traditional Credit Cards: A Comparison
Co-branded credit cards provide unique advantages over traditional credit cards. For instance, they boast higher engagement levels, with 1.2x greater average spending per card and 70% higher activation rates. Unlike conventional credit cards, which often offer generic rewards, co-branded cards provide targeted benefits that align closely with specific brands. For example, a retail co-branded card might give exclusive discounts and loyalty points at a partner store, directly rewarding consumers for their purchases and driving higher spending at that location.
This specialization in rewards and benefits has proven successful in boosting usage and building customer loyalty, as these perks appeal more directly to consumer interests than generic cashback or point systems.
Recent Co-Branded Credit Cards Making Waves in India
India’s co-branded credit card market is diverse, with multiple cards offering benefits tailored to the needs of different consumer segments. Here are some recently launched co-branded credit cards:
CardPartner BankPartner BrandKey Benefits
IndiGo HDFC Bank Credit Card HDFC Bank IndiGo Up to 5 points per ₹100 on IndiGo flights, fuel surcharge waiver, exclusive IndiGo benefits.
KrisFlyer SBI Card SBI Card Singapore Airlines Earn KrisFlyer miles, bonus miles on SIA Group spends, airport lounge access, and travel insurance.
IRCTC HDFC Bank Credit Card HDFC Bank Indian Railways (IRCTC) rewards on railway bookings, fuel surcharge waivers, and accelerated dining and travel purchases rewards.
Tata Neu HDFC Bank Credit Card HDFC Bank Tata Neu 5% back in NeuCoins on non-EMI spends on Tata Neu and Tata partner brands.
Amazon Pay ICICI Bank Card ICICI Bank Amazon 5% cashback on Amazon for Prime members, fuel surcharge waiver, and broad cashback on various purchases.
These cards showcase the diverse range of benefits that co-branded partnerships can bring to consumers, appealing to specific needs within travel, retail, and e-commerce sectors.
Key Considerations for Consumers: Optimising Rewards
While co-branded credit cards offer appealing rewards, consumers must choose cards that align with their spending habits. Selecting a card linked to frequently visited brands maximizes the reward potential. Conversely, choosing a card associated with a less relevant brand could limit the card’s utility.
Ramanathan advises that consumers assess the annual fees, reward structures, and redemption restrictions that may impact the card’s value. With the right choice, consumers can significantly enhance their overall experience and benefit from co-branded rewards.
The Role of Technology in the Future of Co-Branded Cards
Technology will significantly shape the future of co-branded credit cards, especially through platforms like Credit Cards as a Service (CCaaS). Ramanathan explained that CCaaS solutions streamline the issuance and management of co-branded cards through advanced technology and APIs, allowing banks and brands to offer more personalised, data-driven experiences.
Consumers benefit from seamless interactions via mobile apps, instant notifications, and reward-tracking tools, enhancing loyalty and engagement. Advanced CCaaS features allow cardholders to switch reward categories in real time, optimizing rewards based on changing spending habits. This added flexibility could make co-branded credit cards even more attractive, driving future adoption.
Conclusion: The Growing Demand for Co-Branded Credit Cards in India
India’s co-branded credit card market is evolving rapidly, with digitalization, strategic partnerships, and consumer-focused benefits leading the way. As more brands and banks collaborate to meet specific customer needs, co-branded cards are becoming popular among consumers, particularly younger generations looking for brand alignment and customized rewards. With advancements in CCaaS and a continued focus on personalization, co-branded credit cards are poised for sustained growth, making them a strong option for consumers and a significant revenue stream for financial institutions and brands alike.
