Tier-2/3 cities, healthcare, and mid-tier brand partnerships to drive next phase of growth
Zeta, a next-generation banking technology company, has unveiled a new whitepaper revealing that co-branded credit cards (CBCCs) are on track to become one of India’s strongest credit growth engines, with issuer revenues projected to grow nearly threefold from the current ₹17,000–19,000 crore by FY2028.
The report, titled “Shattering the Co-Brand Glass Ceiling,” notes that while India’s credit card base has surpassed 111 million as of mid-2025, penetration remains modest at fewer than eight cards per 100 citizens. Within this growing landscape, co-branded credit cards have emerged as the most dynamic segment—already representing around 17% of cards in circulation and 18% of total spending. By FY2028, this figure is expected to climb to 25% of the total base.
Why Co-Branded Credit Cards Are Becoming Critical
The whitepaper identifies CBCCs as a key driver of profitability for issuers, thanks to stronger economics and higher customer engagement.
- Superior unit economics: Co-branded cards incur acquisition costs that are about 60% lower than standard cards, record ~70% activation rates (compared to ~50% for others), and drive 20% higher spending per customer.
- Untapped opportunity: Expansion into Tier-2 and Tier-3 markets, as well as partnerships across new sectors such as healthcare, rural enterprises, and regional mid-tier brands, offer significant room for growth.
Despite robust demand, the paper emphasizes that operational and technological constraints are slowing progress:
Operational complexity: Managing numerous brand collaborations increases reconciliation, exception handling, and partner coordination challenges.
Fragmented onboarding processes: Custom rules for origination and underwriting hinder scalability.
Rewards and accounting challenges: Diverse rewards structures add layers of tax, settlement, and accounting intricacies.
Regulatory compliance: Multi-party partnerships elevate compliance and risk management obligations.
Customer experience friction: Multiple touchpoints across partners complicate service delivery and SLA management.
Legacy technology limitations: Traditional systems lack the agility and configurability needed for rapid co-brand launches and partner-specific innovation.
Ramki Gaddipati, APAC CEO, Chief Technology Officer, and Co-Founder of Zeta, said: “Co-branded credit cards represent one of the most powerful yet underutilized levers for growth in banking. Their economic advantages are proven—lower acquisition costs, stronger activation, and higher engagement—but banks are constrained by outdated infrastructure.”
He added, “The challenge is not consumer demand—it’s legacy systems and processes that prevent personalization and scalability. Real progress will come from reimagining how cards are designed, issued, and managed—through agile, data-driven, and compliant platforms that enable rapid experimentation and innovation.”
The full whitepaper, “Shattering the Co-Brand Glass Ceiling,” can be accessed here.
