C Citigroup Inc

By Telis Demos 

Citigroup Inc. is partnering with Indian mobile-payments app Paytm to issue the service's first physical credit card.

Paytm dominates India's digital-payments market, with some 350 million users as of late last year. The Citi deal is the latest example of upstart financial players and technology firms partnering with banks to move into more traditional card payments -- an indication both of the upstarts' expanding clout and also of their need to find ways to generate revenue beyond often free digital transfers.

PayPal Holdings Inc.'s Venmo has met with banks to discuss launching a credit card, The Wall Street Journal previously reported. Apple Inc. has partnered with Goldman Sachs Group Inc. on a credit card that is expected to launch later this year.

Likewise, banks are looking to piggyback on the exploding growth of online payments and shopping globally, as they have with Amazon.com Inc. in the U.S. and Ant Financial Services Group in China. In part, it is a defensive play for banks, as firms such as Amazon push further into financial services.

Citigroup globally is aiming to tap its institutional client base to find ways to bolster its consumer business. It has advised Paytm on raising money and provided it with commercial-banking services.

"We are confident that this new exceptional value proposition will attract the urban, digital savvy Indian consumer," said Stephen Bird, the bank's chief executive of global consumer banking.

It remains to be seen how widely credit cards will be embraced in India. Only about 4% of adults over age 25 in India had a credit card as of 2017, according to the World Bank's Global Findex database.

The bank has also sought to link up with other mobile-payments networks across Asia. About 60% of Citigroup's consumer credit cards in Asia are now paid via Ant's Alipay, according to the bank.

The Paytm First Card, announced Tuesday, will tap into the global race for card rewards as well, by offering 1% cash back on purchases.

Paytm was launched by One97 Communications Ltd. in 2010. It counts Warren Buffett's Berkshire Hathaway Corp., SoftBank Group Corp., Alibaba Group Holding Ltd. and Ant Financial as investors.

Write to Telis Demos at telis.demos@wsj.com

(END) Dow Jones Newswires

May 14, 2019 16:11 ET (20:11 GMT)

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