HDFC Bank, SBI Card focus on cashbacks
MUMBAI: Leading credit card companies have announced a sharp reduction in reward points in their premium credit card offerings.
HDFC Bank has cut its reward points by 30-50% on its marquee premium card offerings, HDFC Infinia and HDFC Diners Black, if they are used on the SmartBuy platform, according to a Macquarie Research report dated February 2. HDFC Bank was offering 5x reward points on HDFC Bank Infinia and Diners Black credit cards, along with 5% cashback for all train ticket purchases done on IRCTC via the bank’s SmartBuy platform. The bank now offers 2.5x reward points on the same purchase effective February 1.
SBI Card, on the other hand, has reduced the reward rate for one of its core credit card offering, SBI SimplySave, from 2.5% to 1.7%. HDFC Bank claims that it aims to provide more offerings to customers to compensate for the cut in reward points. “SmartBuy is a one of its kind loyalty platform where HDFC Bank card holders have additional benefits (additional reward points/cash back) throughout the year. Basis early trends we continue to see high traction in SmartBuy from premium customers and we plan to add more categories in SmartBuy to enhance our offering to the customers,” said an HDFC bank spokesperson.
The revision in rewards points come at a time when banks have increased other offerings such as cashbacks on services. SBI Card has shifted focus from reward points to cashbacks, the company said.
“We regularly monitor and change customer value proposition on the basis of feedback and consumer behaviour. We have noticed that customer affinity towards instant benefits such as cashbacks is increasing. In accordance, as a part of this continuous benchmarking exercise, we have revised the reward point earning structure for our “Simply Save” product,” said Rama Mohan Rao Amara, managing director and chief executive officer, SBI Card.
Experts, however, believe that the revision in rates by banks is aimed at reducing the cash outgo on credit cards. Banks such as HDFC Bank offer reward points and cashbacks on purchases made through SmartBuy.
The momentum of the credit card business has remained strong in December 2021, both in terms of card issuance and spends, according to RBI data. HDFC Bank continues to remain the dominant force in the market with a market share of 22.97%, followed by SBI at 19.09% and ICICI Bank at 17.92%.