MUMBAI (Reuters) - India's top digital payments firm Paytm on Tuesday launched a credit card with Citigroup (NYSE:C), widening its financial product base while giving its banking partner an opportunity to vastly expand its credit card customer base in the country.
The new card should help Paytm stay a step ahead of rivals in the fiercely competitive digital payments market in India where companies from Alphabet (NASDAQ:GOOGL) Inc-owned Google to Walmart-owned PhonePe, are all scrambling to grab a piece of the digital payments pie that is projected to grow to $500 billion by 2020, according to the Boston Consulting Group.
For Citi, it is a big opportunity to extend its retail presence in India.
Even if only 1% of Paytm's over 300 million customers use the new credit card, that's a huge number, Stephen Bird, Chief Executive, Global Consumer Banking at Citi told reporters at a news conference.
"We think there is a tremendous potential for growth of this partnership," Bird added.
Paytm became a household name across India after New Delhi's shock move to ban high-value currency notes late in 2016 led to a cash crunch and boosted use of its electronic wallet.
Its parent One97 Communications counts Japan's SoftBank Group, Alibaba (NYSE:BABA) and Berkshire Hathaway (NYSE:BRKa) among its investors.
The Paytm First Card will offer 1 percent cashback on all transactions, unlike reward points offered by most rival credit cards in India.
"We understood that there is a set of the customer base or customer needs that get fulfilled when you have a credit card or card in the hand," said Vijay Shekhar Sharma, founder and CEO of One97 Communications.
"That is why we had launched a debit card of our bank and today we complete our offering with a credit card partnership with Citibank."
Sharma, a self-made billionaire, said his firm is targeting "urban aspirational users who are first-time credit users".