India's top digital payments firm Paytm on Tuesday launched a credit card with Citigroup, widening its financial product base while giving its banking partner an opportunity to vastly expand its credit card customer base in the country.
The new card should help Paytm stay a step ahead of rivals in the fiercely competitive digital payments market in India where companies from Alphabet Inc-owned Google to Walmart-owned PhonePe, are all scrambling to grab a piece of the digital payments pie that is projected to grow to $500 billion by 2020, according to the Boston Consulting Group.
For Citi, it is a big opportunity to extend its retail presence in India.
Even if only 1% of Paytm's over 300 million customers use the new credit card, that's a huge number, Stephen Bird, Chief Executive, Global Consumer Banking at Citi told reporters at a news conference.
"We think there is a tremendous potential for growth of this partnership," Bird added.
Paytm became a household name across India after New Delhi's shock move to ban high-value currency notes late in 2016 led to a cash crunch and boosted use of its electronic wallet.
Its parent One97 Communications counts Japan's SoftBank Group, Alibaba and Berkshire Hathaway among its investors.
The Paytm First Card will offer 1% cashback on all transactions, unlike reward points offered by most rival credit cards in India.
"We understood that there is a set of the customer base or customer needs that get fulfilled when you have a credit card or card in the hand," said Vijay Shekhar Sharma, founder and CEO of One97 Communications.
"That is why we had launched a debit card of our bank and today we complete our offering with a credit card partnership with Citibank."
Sharma, a self-made billionaire, said his firm is targeting "urban aspirational users who are first-time credit users".