Doesn’t make economic sense to duplicate cards: HDFC Bank on network portability

Multiplying or duplicating every card on different networks does not make economic sense for issuers, owing to which HDFC Bank has adopted a more product category-centric approach, according to Parag Rao, Country Head – Payment Business, Consumer Finance, Technology and Digital Banking.

“I don’t think it makes economic sense to multiply or duplicate every card because we have Visa, MasterCard, Diner’s Club and RuPay. So what we have evolved is a dual carding strategy, which works on the principal that I give you one limit across multiple cards, and you could have two different cards on two different networks,” Rao said on the sidelines of the launch of a co-branded card with Marriott International.

Rao’s comments were in response to the RBI’s recent draft norms on card network portability wherein the central bank has asked issuers to offer multiple network options for cards effective October 2023. The deadline for feedback on the draft guidelines was August 4.

Also read: Visa, Matercard or Rupay? RBI wants card users to decide, not banks

Rao said if a customer that has a Rs 5 lakh limit on HDFC Bank’s Regalia card, wants a second Swiggy card on the RuPay network, the bank has the option to give the second card under the same Rs 5 lakh limit, so that customers can enjoy the benefit of both cards and networks under the same limit.

ICICI Bank offers a similar feature on its Rubyx cards, wherein customers get a combined limit for two cards -- one on MasterCard and another on the American Express network.

As such, not too many customers insist on a particular network, but choose cards based on the product and value proposition, Rao said.

Also read: Issuers seek relaxation on certain product categories for card network portability

On intensifying competition in the co-branded card space, Rao said the bank continues to identify relevant MCCs (merchant category code) or categories where customers spend with a focus on getting the best of partnerships and customer value.

Currently, 72-75 per cent of new card acquisitions for the bank are from existing customers and the balance from the open market, Rao said, adding that this strategy will continue as the headroom to grow is large, with an expected growth rate of 25-30 per cent.

Asked about concerns around increasing delinquencies in credit card portfolios, Rao said HDFC Bank does not see any stress and continues to be prudent in its underwriting.

“For a portfolio on a like-to-like basis, our delinquencies would be about half that of the next three-four competitors,” he said.