And let the AI sneak-in to your spending!
Flipkart and Ola are getting ready to launch their co-branded credit cards soon. These two big brands; ride-hailing app Ola and e-commerce giant Flipkart, have tied up with large banks and the days are near when their users are able to access and own co-branded credit card. The purpose behind launching this credit card is to track and get insights of users spending patterns.
Ola is associating with SBI to issue 1 million cards in the first introductory year. This would be a big bet on credit-based payment and Ola can be seen as the next frontier of digital payments.
The partnership terms differ across platforms, and a bank will take care of the things-
• Risk analysis – Bank will analyze the risk by identifying what could go wrong. It can be of two types- qualitative risk analysis and quantitative risk analysis.
• Card issuance – Bank will issue the credit card to the customers of Ola and Flipkart. All the spending details of the consumers will get collected in the data of the bank. When the customer wants to raise a ticket for card renewal, he needs to contact the bank. Card limit setting, suspension, activation, and the blockage will be handled by a bank.
• Payment processing- When the cardholder pays for Ola services or Flipkart purchases, the payment details will be sent to the merchant in exchange. Then the merchant sends a request to authorize payment to their payment processor. Payment processor submits transactions to the card association, which instantly received by the issuing bank. The issuing bank approves or declines the transaction on the basis of present account status of the cardholder.
• Credit line Management – Bank will establish the essential optimized approach to know the credit limit for the credit card user.
• And statement processing – The credit card statement includes total dues, credit limit, available cash limit, available credit limit, payment due date, and minimum amount due to details. There will be separate sections for past dues and rewards point summary details.
The merchant partner will regulate –
• Promotions – Ola and Flipkart will be handling their credit card scheme promotions. The duo brands will be responsible to bring offline and online customers for their credit card scheme.
• Marketing – All the marketing channels and partners will contact the Ola and Flipkart to plan marketing strategies and payments.
• Discounts – All the discounts and vouchers used to attract users for a credit card will be paid by the two companies.
This partnership between Ola and Flipkart is different from traditional type since it doesn’t focus only on marketing. This great rewarding scheme will go to be structured in a way that these brands can re-calculate the spending patterns of their customers. The Ola’s behavior seems logically progressive as it launched Ola Money in 2015, later short term credit and Ola Postpaid became the news of the day.
The investor finds this credit card collaboration as an opportunity for online companies to help them get insights about their customer needs to understand them better. With this artificial intelligence technology, they will be able to map transaction history that also includes offline spends, more spending on their storefront, cross-sell and better assess credit scoring for lending.
Flipkart and Ola are initiating their own credit underwriting model that will mainly leverage their client data to analyze and offer credit limit to customers (with no credit history). Flipkart claims to be tracking 500 to 1000 data points to evaluate their customer’s ability and intent to repay credit amount.
Reports are there that tell Axis bank or HDFC bank will also get involved in the deal with Flipkart.
How banks are benefited from the credit card deal?
Credit card deal is equally beneficial for banks as it allows them to access more new customers at relatively low cost. The merchants get the data related to offline spend of the users. When the customer data and spending data combine, it will open more opportunities and possibilities for both. The deal is expected to be futuristic and will make the ecosystem to grow and flourish.
About Author: Sandeep is working at NSS – Outsource Application Development Company. NSS Provides AWS Solution and AWS Consulting Services.
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