The government has been pushing Indians towards becoming a less-cash economy, but we are still largely cash-driven. Manoj Adlakha, senior vice-president and chief executive officer, American Express, India, talks about what works and what doesn’t with Indian customers, especially millennials, when it comes to going cashless and sign up for products such as debit and credit cards

Amex has been in India in some form or the other for close to a century. How has the credit card landscape in India changed?

We set up office in India in 1921, which was a travel office. Now we have the largest workforce outside the US in India, with 13,000 employees. Along the way, we have launched a multitude of products and witnessed a dramatic change in the landscape. But as far as credit cards are concerned, when you look at the GDP of India, which is about $2.7 trillion, 60% of it ($1.5 trillion) is called private consumption expenditure. Of this, only 10% or $150 billion, is on credit or debit cards and 90% of it is in cash. India is predominantly a cash society; so the runway for growth is still very big.

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Two big events have taken place over the past couple of years—demonetization and the GST (goods and services tax) roll-out. Couple this with the fact that both the government and the Reserve Bank of India (RBI) have pushed for a less-cash society. This has brought about a significant thrust and movement towards the usage of credit cards. For instance, before demonetization, the total number of credit cards in India was 27 million. In the two years since, it has moved to 50 million. The number of points of sale (PoS) terminals was 1.4 million; today it’s more than 4 million. That is the kind of growth being experienced in the payments ecosystem.

How do you compare the Indian market with global counterparts?

What works for Amex in every country we are present in is the premium quality. Our global vision is to provide the best customer service every day. The tenets of our brand centres around trust, security and service. More and more premium customers demand that and have come to expect it, and we deliver that.

For a long time, the target demographic for Amex was high networth individuals (HNIs). But now you have launched a card for millennials—SmartEarn credit card. Why the change?

If you look at India today, 34% or one-third of the population is millennials. Of the workforce, 47% are millenials. This is a strata that will only grow, and so will their expectations. They are going to demand better lifestyle and services, and American Express is well-positioned to provide that. The only hurdle that can present itself is when a fee is charged.

This particular card is priced at a lower entry threshold. We want to get the millennials in and let them experience the product. They are digital natives. Every way they engage and transact with us—from the time they apply for a card to the rewards they seek—is online. Around 90% of them don’t even want to call a service representative and would rather transact online.

There are other such cards coming to the market like HDFC Bank’s Millennia Card that specifically target millennials. Some don’t even charge a fee. How will you compete with them?

We can’t look at it from the fee perspective alone. Yes, there is a fee, but for instance, the fee charged on the SmartEarn card is a very nominal one. It’s only 500, and even that is given back if you spend 40,000 a year using the card. So if you spend around 3,000 every month, the card is effectively free for life. On top of that, you get the services backbone that Amex offers.

Reward points and offers have become an important part of the credit card deal for many customers. What does Amex do about that?

The reward points vary from product to product. Our products are very customized, so the rewards earning rates are different for different products. For the SmartEarn card, for instance, if you use it on certain websites, the points are five or 10 times what you would normally earn.

Also, we are the only one to offer a charge card, which is a card with no preset spending limits.We look at past spending and repayment patterns and based on that let people spend, and we have some very high spenders.

Do millennials spend and borrow differently from the previous generations?

Millennials represent nearly 34% of the Indian population and are the biggest spending generation. They live in an interconnected world, in a shared economy and are digital natives. They value premium experiences more than anything else. Of our current accounts-in-force, nearly 37% card members are millennials. Our internal analysis through customer feedback shows that the spending traits of millennials are no different from the affluent segment. Both have a positive mindset, are open to new experiences and have high expectations.

Do you think HNIs are the driving force behind consumption or is it more evenly distributed?

One of the striking features of interest to us is the growing number of affluent Indians who are fuelling the demand for world-class products and services. As they go around the globe, they turn to American Express as a valued and trusted brand.

Our suite of credit card product ranges from catering to affluent, premium and millennials. We want to be part of the young, aspirational professionals’ spending habits.

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