The growing number and increasing usage of credit cards in the country shows the rising aspirations and spending power of Indians. It also suggests that the urban-rural divide in the country (in terms of digital habits) is bridging rapidly. Amidst the growing acceptance of credit cards, co-branded cards have emerged as a way to cater to the aspiring middle class that invests in experiences. These cards strengthen brand preference and reward it accordingly. Recently, Mastercard launched co-branded cards in partnership with Flipkart-Axis Bank, Matrix-Federal Bank and so on.
Manasi Narasimhan, vice president, marketing and communications, South Asia, Mastercard, talks to ETBrandEquity.com about the core objective of behind introducing co-branded cards, and how they can help increase brand visibility, salience, and expand consumer base.
How do co-branded cards allow brands to serve a niche audience?
The core objective of any co-branded card program is to provide a meaningful incentive to a niche audience group (for example, frequent fliers, online shoppers, and movie buffs) for every interaction they have with the brand. The first step is to attain insights about consumer likes, interests, and aspirations. This helps in the creation of a value proposition and seamless consumer onboarding process. The entire consumer journey is personalised without unnecessary spamming. Last but not the least, there is a hassle-free redemption process so that these consumers are encouraged to come back and build a long-term relationship with the brand.
What are the core categories where co-branded cards are driving spends?
Travel followed by fuel, e-commerce, and retail shopping are the top categories where co-branded cards have added a lot of value for consumers. As these consumers get tangible benefits like cashbacks, complimentary tickets, shopping vouchers, etc., there is a higher preference for the partner brand.
Mastercard is the leader in the global co-brand space. For Mastercard, co-branded programs with airlines across the world have been hugely successful. Given the rapid digital adoption in India, e-commerce is another promising segment for us. In July 2019, Mastercard partnered with Axis Bank and Flipkart for the launch of a large co-branded card program offering unmatched benefits for the consumers. We expect this to shape consumer behaviour significantly in the coming months. From a strategic point of view, we will continue to focus on a digital-first experience across the co-brands we operate.
How do co-branded credit cards develop loyalty amongst consumers? Why is the trend picking up in India?
With the rise of Digital India, consumers have access to information and choices that were not available in the past. The power of shopping via a smartphone device allows consumers for real-time actions through carefully designed co-branded value proposition. An average Indian consumer could participate in 10 to 11 loyalty programmes conducted by retail chains, financial institutions, hospitality, entertainment and airline companies. The key is to design these programmes to suit business objectives and consumer expectations. Co-branded cards are an excellent way to combine the benefits of these programs with the convenience of digital payments.
India is witnessing an increase in this behavioural change among consumers who sign up for co-branded cards. As the market is dominated with the largest millennial population in Asia Pacific, Mastercard believes that this audience is driven by rewards and therefore is a prime target for co-branded cards. As per a recent Mastercard study, over 80 per cent of Indian millennials prefer to buy a brand that would tailor services to their needs.
How do co-branded credit cards help the issuers drive spends in tier 2 and 3 cities?
Post demonisation, digital payments in tier 2 and 3 towns have grown 2.5 times faster as compared to metros. Emerging cities (those with populations of less than 1 million) in India are expected to be the fastest-growing and will constitute about one-third of total consumer spending by 2025. Segments that majorly use digital payments such as e-commerce will continue to grow at 30% CAGR till 2022, led by tier 2 & 3 cities where the number of online shoppers is expected to increase from 25 million in 2017 to 125 million in 2022. The rising aspirations of people in these cities mean that there is a huge opportunity for merchants to drive consumer spending here, through co-branded cards. However, it is essential to customise the value proposition according to local needs and tastes.
What role do influencers play in the adoption of cards among the different audiences (affluent, middle class, tier 2 and 3 audiences)?
Making people aware of the new product offerings and propositions plays a crucial role in the success of a product. With the help of celebrities and influencers, brands often try to build excitement around new offerings. It also acts as a reassurance for consumers and gives them a comfort level to try new products. Besides, celebrities and influencers can provide the much-needed personalised touch to make the product more desirable to the consumers. Influencers are exemplars of passion points and can hence drive higher affinity towards the use of cards. Mastercard has recently engaged with popular influencers like cricketer Rohit Sharma and actor Karishma Kapoor to build awareness about the convenience, safety and exciting offers that can be availed on Mastercard-powered digital payments on select cards while travelling abroad.
What is Mastercard’s marketing strategy and how it is different from its competitors?
The focus for 2019 is clearly to drive forward the ‘cash to digital’ agenda and support government’s Digital India through continuously educating consumers and merchants. To achieve this, among many other initiatives, we have partnered with legendary cricketer Mahendra Singh Dhoni, who has a massive following and influence across the country. Our recent TV campaign with MS Dhoni, reached an audience of over 520 million people in 8 vernacular languages and was extremely effective in driving usage in tier 2 & 3 markets. Moreover, Mastercard is working closely with the Confederation of All India Traders (CAIT) to reach 70 million merchants and create awareness about the benefits of accepting digital payments. We are confident that these will lead to a behavioural shift among those who still prefer cash.
Apart from this, emphasis will also be on driving choices for affluent India through world-class priceless experiences and positioning ourselves as the card of choice for increasing overseas travel amongst Indians. This will help us showcase the power of cashless cross border tourism along with a bouquet of priceless experiences. Globally, what differentiates Mastercard’s marketing strategy is that we aspire to be a lifestyle brand, and we have identified ten passion points that people care about. Three out of these, namely cricket, Bollywood and music, are the most relevant passions that India as a nation follows. Therefore, Mastercard is focusing on creating several unique propositions around these points to have a deeper impact on the lifestyle of Indian consumers.
Where do card payments stand in the coming times as UPI penetration is also being seen as a promising substitute for traditional payment methods?
90% of retail payments in India are still in cash. Hence, there is a massive opportunity for transforming the payment habits of Indians and encourage them to adopt digital payments. This opportunity is not mutually exclusive; therefore, one player’s gain is not other’s loss. As there is a shift to electronic payments, there are so many more opportunities for everybody. The fact remains that we have had an impetus towards digital payments like never before. That is why we see this kind of Fintech innovation in India. Cards continue to be the most preferred means of digital payment: India had 886.4 million cards (49.6 million credit cards and 836.8 million debit cards) at the end of June 2019, and the market is still growing.