HDFC Bank and SBI Card focus on cashback


Bombay : Major credit card companies HDFC Bank and SBI Card have heavily reduced reward points in their premium offers.

HDFC Bank has cut rewards points by 30-50% on its premium HDFC Infinia and HDFC Diners Black cards if redeemed on the SmartBuy platform, according to a report from Macquarie Research dated February 2. The private bank was offering 5x rewards points on Infinia and Diners Black credit cards, as well as 5% cashback for all train ticket purchases made on IRCTC through the bank’s SmartBuy platform. The bank is now offering 2.5 times more rewards points on the same purchase starting February 1.

SBI Card, meanwhile, has cut the reward rate of one of its major credit card offerings, SBI SimplySave, from 2.5% to 1.7%.

HDFC Bank says it aims to provide more offers to compensate for the reduction in reward points. “SmartBuy is a one-of-a-kind loyalty platform where HDFC Bank cardholders enjoy additional benefits (extra reward points/cashback) throughout the year. Based on early trends, we continue to see strong traction in SmartBuy from premium customers and we plan to add more categories in SmartBuy to enhance our offering to customers,” a spokesperson for HDFC Bank said.

The revision to rewards points comes as banks have increased other offers such as cashback on services. SBI Card said it has shifted the focus from rewards points to cashback. “We regularly monitor and modify the customer value proposition based on consumer feedback and behavior. We’ve noticed that customer affinity for instant perks like cash back is increasing. As part of this ongoing benchmarking exercise, we have revised the rewards point earning structure for our ‘Simply Save’ product,” said Rama Mohan Rao Amara, Managing Director and CEO of SBI Card.

Experts believe, however, that the revision aims to reduce outflows on credit cards. Banks such as HDFC Bank are offering rewards points and cash back on purchases made through SmartBuy and are moving to a Buy Now Pay Later model where they can earn money from interest on installments.

“Banks have developed a system that allows customers to instantly redeem rewards points on credit card transactions, resulting in increased redemption on rewards points. It’s good for customers, but it’s fully funded by the banks, so a few banks have reduced the reward points for a specific card segment,” said Sachin Vasudeva, Associate Director and Head of Credit Cards,

Momentum in credit card activity remained strong in December 2021, in terms of card issuance and spending, according to data from the Reserve Bank of India (RBI). HDFC Bank remains the dominant force with a market share of 22.97%, followed by SBI at 19.09% and ICICI Bank at 17.92%.

HDFC Bank issued around 9.50 lakh credit cards in the third quarter, its highest credit card issuance ever in a quarter. This came after RBI lifted a ban on issuing credit cards in November. However, the bank recorded fee income growth of only 2% due to the contraction in payment product fees. The bank attributed this to rising spending and falling revolver rates, less use of credit limits and the launch of cards with fee-waiver features.

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