Taking stock of the corporate credit card business in India: past, present, and future

Despite being regarded as one of the most convenient and flexible credit vehicles, especially for SMEs, the use of corporate credit cards has been a bit sluggish in the Indian market. According to RBI, almost 62 million credit cards were in use in India in 2021, corresponding to less than 6% of the total population.

Historically, corporate credit cards have been difficult to get, mainly because credit cards are not just a mode of payment but also a lending tool. Hence, banks and NBFCs have been extremely cautious while issuing them. For a long time, corporate credit cards were available primarily only to large multinationals with a large employee base.

Fintechs leading the corporate credit card revolution for the SMEs

Traditionally, India was and continues to be a debit card market. However, over the past few years, banks and financial institutions have started focusing on other instruments like credit cards, buy now, pay later (BNPL), and credit EMIs.

New-age fintech has emerged as one of the biggest disruptors and accelerators of the credit card – especially the corporate credit card business in India.

Corporate credit cards provide great flexibility and transparency to businesses. Modern fintech companies are playing a crucial role in extending them to more and more corporates, especially in the startup and SME segments.

Today, fintech companies provide corporate credit cards that can be used by enterprises to pay a part of employee salaries, expense reimbursement, travel expenses, hotel stays, and other perks. Since these cards have an inherent credit limit and employees can use them without going through lengthy approval processes. Enterprises can increase, decrease, or block these cards as required and instantly if such a need arises.

Business owners can track credit card transactions in real-time, monitor expense trends, and plug leakages, using advanced and intuitive apps and dashboards.   Some other benefits of such new-age corporate credit cards include a higher credit limit as compared to personal cards, a quicker approval process, and an extended interest-free repayment period.

Technologies like data analytics have today enabled fintech companies to fast-track the process of consumer profiling extensively, enabling them to process and approve credit cards to SMEs within just a few hours. By leveraging technologies like AI (Artificial Intelligence) and DL (Deep Learning), fintech companies have been able to explore new credit risk models that are helping to cater to new customers with or without a credit score. Also, by forging co-branded partnerships with banks, fintech companies have been able to deliver superior services.

Covid-19: an inflection point in the corporate credit card business

The pandemic emerged as a big turning point, with the credit card industry exploding during and after the pandemic. Companies and lenders reeling under the impact of high NPAs turned to credit cards to start afresh and explore opportunities for business growth and expansion.

Unlike earlier, credit card adoption is expected to grow at an even faster rate in the coming years, majorly because there is a lot more data available that helps to assess the customer’s creditworthiness. With the unparalleled rise of UPI transactions, credit card providers can build several data models by embedding the digital transaction history with the financial/credit history of the consumer. This is and will continue to drive a growth momentum for the credit card industry in the times to come.

Zaggle business credit cards: disrupting the corporate credit card market

Till date, the financial services industry and particularly banks have focused on retail cards mainly because it is a larger market. However, with close to 65 million MSMEs present in India today, the opportunity is huge and untapped.

Given this opportunity, the Zaggle credit cards, targeted towards SMEs, are India’s first VISA Infinite business credit cards that help small business owners address their credit needs and manage business expenses through a single instrument. More than being just a payment or a lending instrument, these credit cards can function as de facto enterprise financial management systems that help enterprise owners to track and manage various aspects of enterprise financial processes.

The Zaggle credit cards are unique and combine expense management, partner/merchandise, and accounts payable solutions through a single platform. This enables business owners to manage spends as well as their credit needs through an easy, one-stop solution.

The Zaggle ecosystem, of which the credit cards are a part, acts like an umbrella resource/expense/finance management system. Through this ecosystem, enterprises not only can track and manage payments but also other financial instruments like gift cards, vouchers, employee/travel reimbursements, and even leads and individual plans created for customers.

SaaS powered ecosystem

In addition to all these functionalities, the Zaggle platform is backed by robust SaaS capabilities that enable integration with different finance/enterprise partner solutions. For e.g., companies looking to build enhanced tax computation capabilities can leverage the Zaggle credit card-connected platform to integrate tax APIs to build better systems, faster and in a cost-effective way. These capabilities are providing much-needed flexibility and ease of doing business, critical for small and medium businesses.

Conclusion

Since small businesses lack the resources and capital to manage multiple instruments and platforms for different needs, SMEs value the products that help them cover key business areas through a unified platform. For startups to stay ahead in a competitive environment, they will need new-age, digital technologies to increase operational efficiency, reduce turn-round time and focus on innovation. Products like the Zaggle business credit cards are emerging as an advanced, digital one-stop solution for meeting the diverse need of SMEs.

The Zaggle corporate credit cards are designed to fit diverse business needs. Find out how they can help SMEs automate expense management, enable easier credit access and scale faster.