What Are Co-Branded Credit Cards And What Are Their Privileges?

When you purchase a product or a service, there are several ways in which you can choose to pay. You could pay by way of cash, debit or credit cards, or even mobile wallets. There’s also another kind of specialised credit card called a co-branded credit card that you could carry in your wallet. 

Co-branded credit cards are a hybrid between a store card and a rewards card. As they are backed by a major network, they can be used at all merchant establishment that accept a regular debit or credit card.

Strictly speaking, co-branded credit cards are actually a marketing strategy that also allows the bearer of the card to buy consumer durables, earn points for the purchases made, and redeem them among others, with the partner organisation which is co-branding the card.

Says a research report by PwC: “The first credit card in India was launched in 1981 by a then leading public sector bank. By 1996, the concept of co-branded cards, where two parties, typically an issuing bank and a corporate/merchant join hands to offer a product that encompasses the best of both worlds, was introduced in the country by a leading foreign bank in association with a consumer durables brand.”

According to a study of popular co-branded cards in India, travel is the most popular segment, followed by fuel, e-tail, and retail shopping. These segments offer tangible benefits, such as complimentary tickets, shopping vouchers, etc. which leads to instant gratification for the customers. 

Traditionally, co-branding was popular in credit cards, but with the emergence of new use cases like transit, meal, etc., issuers are tapping the opportunity with prepaid and debit cards, too. With the introduction of the Smart City Program by the Government of India, banks are partnering with municipality/metro/bus authorities, and there is a significant push to issue co-branded prepaid/debit cards, thus enabling citizens to just walk through the public transport and use the same card for shopping or making payment at any store. 

Here are some of the advantages of co-branded credit cards: 

Accepted Globally: Chenthil Iyer, founder, and chief strategist, Horus Financial Consultants says that co-branded cards are global cards in the sense that they have widespread acceptance.

“While they are accepted worldwide, they can be used at any merchant outlet across the globe, and the bill will be generated in rupee. This is a great convenience for international travellers, as they do not have to think about currency conversion, and simply have to swipe the card,” he says.

Rewards Customer Loyalty: Such cards offer reward points to their loyal customers. One could use these rewards to avail discounts on the next purchase or to could collect points to claim them for a bigger discount. 

Other Rewards: Some high-end co-branded credit cards also offer privileges like free airport lounge access, and offers on hotels and restaurants. That said, before opting for a high-end co-branded credit card, it is advisable to check with the bank about the privileges that come with it. Also, such privileges offered with high-end co-branded credit cards also come with a high annual fee. 

Freebies And Gifts: Co-branded credit cards typically offer freebies and gifts for spending a specified amount for a specified period. 

Fee Waivers: Most co-branded credit cards do not charge joining fees and annual fees to cardholders. Even if they do, they might offer to waive them off on spending a specified amount yearly. However, some high-end credit cards may charge joining fees as per the terms and conditions of the cards. 

Customised Cards: One could choose a co-branded card based on his/her lifestyle and requirements. One could also set a regular spending limit, or an international spending limit to customise the card according to one’s usage.