HDFC Bank — the largest credit card issuer in the country — is eyeing the commercial spends space in association with Diners Club in a bid to grow its business.
With over 18 million cards in circulation, HDFC Bank is the largest issuer of credit cards in India with monthly spends of around Rs 40,000 crore.
Parag Rao, country head — payment business, consumer finance, technology and digital banking, HDFC Bank, said along with the retail or individual segment, the opportunity for credit cards in the business-to-business (B2B) segment in India is growing significantly.
“By B2B we mean card spends done by the government or institutions or small and medium enterprises, which use the card to make payment with suppliers. That is a very large segment, opportunity wise, and is equal to the retail segment,” Rao told Business Standard, in a joint interaction with Ricardo Leite, senior vice-president, head of international markets, Discover Financial Services, which owns Diners Club.
“I strongly believe that HDFC Bank’s portfolio will continue to grow not only in the consumer side and co-brands, but also in the commercial payments side, the B2B space. There is a tremendous amount of volume — the ticket size is very large because that business makes payments to businesses. This is considerably driving the growth portfolio,” Leite said.
HDFC Bank and Diners had an association for over 10 years. The bank is the only lender in India to have an association with Diners.
“Our plan is to grow the Diners Club portfolio. We have just announced a co-branded card with Marriott, which is a Diners Club brand,” Leite said.
Last month, HDFC Bank joined hands with Marriott Bonvoy, Marriott International’s travel programme, to launch the ‘Marriott Bonvoy HDFC Bank Credit Card.’ It is touted to be the country’s first co-branded hotel credit card. The co-branded credit card will run on Diners Club.
HDFC Bank is one of the largest issuers of cards for the premium and super premium segment. And, the Diners network contributes 30 per cent of that segment. “By numbers, the premium segment will not be more than 5-6 per cent. But by value, it is close to 25 per cent,” said Rao.
In the B2B segment, HDFC Bank has a Flipkart-Diners wholesale card, which is typically offered to small retailers. They also go to Flipkart to buy their wholesale needs in a month.
“This card gives them significant value on their monthly purchases. That is a very large space. The space is emerging and growing,” Rao said.
The largest private sector lender is also aiming for the premium small and medium enterprises (SME) segment.
“That is another area, which Diners and HDFC Bank will be targeting,” said Rao.
He said that by 2030, 30 per cent of the Indian household will be classified as a premium segment with more than Rs 10 lakh per annum household income.
In May 2021, the Reserve Bank of India (RBI) put restrictions on Diners Club from on-boarding new customers after it failed to meet local data storage norms. The restrictions were lifted in November 2021.
Leite said he is seeing triple digit growth since the restrictions were lifted. “We are seeing triple digit growth consistently (post the embargo), which is driving consumer and commercial payments,” Leite said.
Discover Financial Services said the regulator has raised the bar for any player to do business in India and one needs to invest substantially.