Beyond Plastic: Future of Credit Cards in a Digital First World

The panel discussion at the Bharat Fintech Summit 2024 explores the future of credit cards in a digital-first world. Panelists, Arvind Butola, Product Head - Digital Bank AU0101, Amarjit Walia, Head Consumer & Commercial Card, ICICI Bank, Deepti Sanghi, Founder, Kodo, Prithwish Ray, Chief Business Officer, Hyperface, Saurabh Puri, Chief Business Officer, Credit Card and Lending products, Zaggle, Kohinoor Biswas, head Consumer Lending and Postpe, Bharatpe discussed the transition from physical plastic cards to virtual cards, the role of digital technologies in credit card usage, and the challenges and opportunities of serving new customer segments like MSMEs.
Key Takeways
Shift towards digital: - The credit card industry is experiencing a rapid shift from physical cards to virtual cards and digital payments. Banks are offering digital onboarding, instant card issuance, and integrating credit with digital wallets like UPI. Customers are increasingly using credit cards for smaller everyday purchases.
Importance of underwriting: Even with a shift towards digital, underwriting remains crucial for issuing credit cards. New data sources like GST data and transaction behavior are being explored for underwriting MSMEs. Credit cards need to adapt to the working capital cycles of small businesses.
Coexistence of physical and digital: - While digital options are growing, physical cards are likely to remain important for international transactions and specific customer segments. Security and customer experience are key considerations in both physical and digital card offerings.
Rewards programs: - Traditional reward programs based on MCC (Merchant Category Code) are becoming outdated. Issuers are looking for more sophisticated ways to differentiate rewards based on factors like payment method and customer behavior.
MSME opportunity: - MSMEs represent a significant untapped market for credit cards. New products like B2B payment platforms with credit facilities are emerging to cater to this segment. Alternative data sources and an understanding of business cash flow cycles are crucial for underwriting MSMEs.
Summary
The future of credit cards lies in a digital-first approach with a focus on convenience, security, and personalization. While physical cards may still be relevant in some scenarios, digital wallets and virtual cards are gaining traction. The industry is also exploring ways to better serve the MSME segment through innovative products and underwriting practices.
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