The credit card industry has long been accessible to traditional banks, and these banks are the institutions that do the checks and balances on a customer and, depending on that, they used to issue a credit card.
The consumption trend is coming to India, and the market is becoming open and accessible due to the Internet. It creates a demand for credit cards among the population, and here, the fintech companies are leading the chart by bringing new customers on board, and through that, they are taking the lead in signing new customers.
It’s a positive aspect of India’s overall demography, and the rise in fintech startups has accelerated the pace of credit card disbursements. These companies are either partnering with banks or NBFCs and building products on top of that, creating a symbiotic relationship between the two firms.
A Sneak Peak into the Credit Card Ecosystem
In India, the credit card ecosystem is growing at a faster pace, with the potential to serve the large population base that is relatively young and coming to credit programs. As of 2024, the total number of credit cards issued has crossed the mark of 100 million, with still much headroom for the industry to grow.
India’s consuming class needs to be further penetrated to benefit from credit cards being spread across the country fully. For the stakeholders, this means a significant chunk of revenue will now come from this segment, which remained a relatively small portion of the revenue for banks.
DSA apps in India are also changing the market, and through those entities, many people are getting access to credit cards. Apart from that, the major proponents of first-time credit card users are the fintech companies that are bringing the facilities to the underserved population of the credit country. It’s allowing them to build a credit score that makes a person eligible for future cards.
Difference Between Getting a Bank and a Fintech Credit Card
Several banks like SBI, HDFC Bank, and Axis Bank are distributing credit cards through their operational channels, and these institutes tend to offer cards to that segment who have an existing history of using credits and have a strong foundational profile.
In getting a credit card from a bank one can get that under several conditions. A person who has a salary account in the bank and that institution is offering a credit card to the customer. Next happens when a person already has a loan account, and that has created a credit history. In such situations, one might have the chance to get a credit card from the bank.
Fintech companies allow a person to have a credit card entirely by accessing basic personal information and doing the work online, making it fast and efficient. By tying with banking institutions, these fintech companies offer prepaid credit cards, where one will get a credit card from the fintech brand. They will have all the accessibility of a regular card.
Areas Where Fintech Companies are Doing Better in the Sector
Fintech companies are successfully combating traditional players by offering more exciting products with much better reward programs and a marketing drive that appeals to Gen-Z customers, who are the targeted customers of these companies.
These fintech companies like Slice, Uni, LazyPay, and others are also the proponents of “Buy Now Pay Later” schemes, which allow the users to have credit card-like features that make some of the customers eligible to further credit cards from traditional banks.
Things Customers Need to Know About Fintech Vs Bank Cards
Multiple things are different among regular credit cards versus the ones that a fintech company issues. Therefore it’s required for a customer to know the nuances of each credit card. Here, a person can take the help of a loan agency, and through them, one can get details about credit cards.
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Understand the Billing Cycle
In a normal credit card, the gap between the date of payment and the billing date is 45 days. Whereas, in a fintech-based credit card, the date of payment is between 30 and 40 days.
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Be Clear on 1/3rd Bill Payment & on No-Cost-EMI
Stay clear about the uses of the card that says no-cost EMI, as it might lead to a debt trap, and a person might need to pay GST separately to convert each amount into a no-cost EMI structure.
These are some of the differences between bank-based credit card systems and the ones issued by fintech startups.
