Paytm, India’s largest digital wallet company and most valued fintech firm, tied up with Citibank to launch its first credit card. Branded Paytm First and powered by Visa, the card promises an unlimited 1% cash back for all transactions carried on it, for perpetuity.

Vijay Shekhar Sharma, chairman and CEO of One97 Communications, the parent company of Paytm, is optimistic that they will end with at least a few million subscribers for the new credit card. Says Sharma: “Paytm credit cards will be available to customers who subscribe our app and we already have 300 million of them. We hope to give the cards to a small percentage of our subscribers and that would amount to a few millions.”

The deal which took a year to sew up will have the contactless enabled cards carry only Paytm’s logo. However, the card and transactions will be underwritten by Citibank. That’s because under the current regulations credit cards can only be issued by a bank in India.

Keeping the value proposition of paying with Paytm intact, credit card cash back will also include any additional offers already promised for a transaction. So, if Paytm payment app promises 10% cash back for buying a consumer durable, the new credit card cash back will also mirror that.

Currently Paytm averages a monthly user base of 150 million customers for its payment app. The issuance of the card won’t increase monthly users significantly as the cards most likely will be given to active customers to start. However, Sharma expects that customers will transact more with the cards as they come with an option to convert large purchases into equated monthly instalments (EMI).

The practice of banks partnering with leading brands to extend their franchise is not uncommon. Citibank has tied up with partners like American Airlines, retailers Cosco, Best Buy and Home Depot to launch cards. In India too, corporate likes Indian Oil and the Tata group have credit cards powered by local banks. Apart from capturing service fee in card transactions, issuers also get access to data on customers spending behaviour.

Citibank’s Global Consumer Banking CEO Stephen Bird said, “Paytm First Card gives us a big opportunity to extend our expertise in credit card services to a new all-digital consumer base.”

He further added that this will also help the bank expand its base in Asia’s third largest economy that is hungry for credit. Citibank has about 2.75 million credit cards in the country at present.

Paytm’s credit card can be used internationally and will carry an annual subscription fee of ₹500. The fee will be waived off if the customers spends ₹50,000 annually.

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