Ola Users Need Tread This; Tap To Find Out
Cab hailing service providers Ola and Flipkart are rumoured to launch credit cards in partnership with large banks. Ola is set to launch a credit card, likely in partnership with State Bank of India as early as next week. The company plans to issue 1 million cards in the first year, leveraging its 150 million customer base. “Ola is betting big on credit-based payment as next frontier of digital payments,” one of the persons said.
While the terms of these partnerships differ across platforms, a bank typically handles risk analysis, card issuance, payment processing, credit line management and statement processing, while the merchant partner controls marketing, promotions and discounts. A person directly aware of the company’s plan said the “broader strategy is to offer wider services aligned with mobility and beyond, with a digital-first onboarding experience as well as real-time expense management.
This would be a logical progression for Ola, which launched Ola Money in 2015 and then a short-term credit offering, called Ola Postpaid. An investor stated, “Credit card collaboration is an opportunity for internet companies to help them understand their customers better, map transaction history including offline spends, increase spending on their storefront, cross-sell, and over time better assess credit scoring for lending.”
Vivek Belgavi, fintech leader at PwC, said, “Such partnerships will allow internet companies to enrich behavioural data and drive adoption of their proprietary payment rails. Once they know where their most valuable customers are going, they can in turn target better and also discover future brand partnerships.”
Credit card partnerships are a high-growth opportunity for banks as they get access to a large number of new customers at a relatively low cost and merchants who don’t know what customers are buying outside their stores. By combining both databases, both the merchant and the bank can get a much deeper understanding of the consumer.