American Express has been known for premium and expensive credit cards. However, the company has dropped its entry-level card eligibility criterion of Rs 600,000 annual income to Rs 450,000.
“We are witnessing higher engagement with the young and digitally-savvy demographic; 50-60 per cent of our new card members are below the age of 32 years,” says Manoj Adlakha, chief executive of American Express Banking Company in India.
Not only that — it is offering the card at an annual fee of only Rs 1,000 in the first year, and with a welcome gift worth the same amount. Effectively, a no-fee card.
Based on the spending that card members do and the benefits they would get in terms of membership reward points or bonus, the return they could get on the total spend threshold will be two to three per cent, says Adlakha.
However, for the rich and famous, there are offers at the other end. It is the only company offering a ‘platinum charge’ card, with a fee of Rs 50,000 annually and with no pre-set spending limit.
“We are witnessing higher engagement with the young and digitally-savvy demographic; 50-60% of our new card members are below the age of 32 years” Manoj Adlakha Chief executive of American Express Banking
A problem it faces is of consumers complaining of limited merchant coverage. Adlakha says they are rectifying this. “Nearly 180,000 more merchant locations started accepting American Express cards in 2017. We embarked on partnerships with ICICI and State Bank of India for new merchant acquisition. We have nearly 20 per cent market share of point-of-sale (PoS) terminals and the good news is that these cover 80-85 per cent of the spending needs of our card members,” he says. Adding that PoS terminals powered by the company are growing at a little over 40 per cent annually.
The company says it is not worried about mobile payment companies possibly eating into their business. Adlakha says nine to 10 per cent of transactions are through digital payments (cards and mobile wallets) and the rest is still cash. “So, there is enough headroom for everyone to operate. Digital wallets and payment banks are relevant for specific used cases but I don’t see them as competitors in the bigger part of the business.”
However, he adds, businesess in the past few years have dramatically shifted to digital. He notes that 90 per cent of their card members log-in to their accounts digitally. “Online transactions contribute 57 per cent to our total number of transactions and 46 per cent to total value.”
American Express has also been quick to get on to the government’s QR code platform for digital payments, despite not catering to the mass market. Adlakha the QR code has nothing to do with income brackets but is for enabling merchants who feel they cannot afford a PoS or EDC (electronic data capture).
Adlakha is cautious when asked about the recent guidelines of the Reserve Bank of India (RBI) that all their data has to be stored within India in the next six months. “American Express is committed to following all applicable regulations and accords utmost importance to data privacy and security. Our data security procedures are robust and use sophisticated technology protection. At this stage, the RBI directive on local data storage is at a broad level and we are working with industry participants to understand the details. So, it would be premature to respond with specific action plans.”