Why Paytm launched the "UPI Credit Card"? 💳

Lending + credit cards is a match made in heaven.

May 19, 2023

Welcome to the 151st edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 95,300+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more

Paytm launched "Paytm SBI RuPay" credit card 💰
Don't mistake it as - just another card among 100s 🥹
Here's the plan to become "UPI credit card of India" ⬇️

Go back to 2016 🗓️
UPI pilot had ~90,000 transactions with 21 banks as payment partners. De-monetisation triggered the remarkable UPI growth.

But, Paytm missed the UPI bus 🚌
It underestimated the extent of growth UPI would have and kept pushing wallet. It missed becoming the UPI leader in the country. In hindsight it feels simple, I can imagine what they went through.

It's learning from past mistakes 🎯
Moving fast adopting newer products with UPI lite - a UPI product that can operate like a wallet and transact without an active internet connection.

RuPay card is the big tailwind for PayTm ❤️
In late last year, RBI allowed RuPay credit cards to be used with UPI. That's exactly the game Paytm wants to get early with the co-branded credit card with SBI + Rupay.

How will Paytm play 'UPI credit card' game? ⬇️

PayTm wants to be India's largest lender, focusing on it's 90 mil users.

First/ segmenting the right users 🤖
Users with good credit score, lending intent & goes further into their historical behaviour on the Paytm product.

Second/ discovery on the app 📺
With ~15 monthly app opens per user on the Paytm app, this is a easier problem to solve for a high frequency product like Paytm.

Third/ early adoption curve 📈
Paytm is rushing to capture this market early on - it has to acquire users at speed. With it's upto 5% cashback promise (learning from Amazon pay card), lounge access & Paytm First membership it might just become popular.

Fourth/ educate Paytm merchants 📝
Most sellers have no idea that something like accepting credit card payments without the card machine is possible. They will need to be educated - faster than Paytm's competitiors would.

Fifth/ solve for the commission fiasco 🪙
Most merchants accept payments using UPI at 0% commission. With UPI credit card, the commission won't be 0%. Merchants will need to see the incremental "dhanda" they could get from credit card user base.

What does it mean PhonePe & Google Pay? ⌛️

Both allow using a RuPay credit card at the moment. I won't be surprised if they launch a co-branded credit card with large banks in coming weeks. Credit card interest rates is lucrative business.

Will Visa & Mastercard sit around and watch? 🙇🏻‍♂️

Short answer - Nope. They are lobbying hard within Indian government to allow them to take a piece of this gold rush. Once RuPay gets enough market share, RBI might allow these 2 credit card infra giants to participate.

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