Why India’s Co-Branded Credit Card Boom Is Artificially Constrained

Contents:

• The Myth That Only Marquee Partners Scale
• The Real Bottleneck is The Operating Model
• Concentration Risk Disguised As Focus
• What Banks Need To Change Now
• The Ceiling Can Be Lifted

India’s co-branded credit card (CBCC) segment is widely acknowledged as the fastest-growing pocket within cards. Volumes are rising faster than generic cards, acquisition economics are superior, and customer engagement is measurably stronger.

Yet, despite this momentum, most banks continue to run surprisingly small and conservative co-brand portfolios.

This is not a demand problem. It is not a partner problem. And it is certainly not an economics problem.

It is a self-imposed ceiling created by how banks design, launch, and operate co-branded programmes.

The numbers already tell a compelling story. Today, co-branded cards

• Account for roughly 17% of India’s total credit card base
• Nearly 18% of overall spend
• Their share is projected to rise to ~25% of cards in force by FY ‘28
• With issuer revenues from CBCCs expected to grow nearly 3x over the same period

Few product segments offer this combination of scale, growth velocity, and superior unit economics

India has crossed 112 million credit cards, but penetration remains structurally low. Growth is increasingly coming from embedding credit inside ecosystems where customers already spend – e-commerce, travel, mobility, retail, and digital services. Co-brands are a natural fit for this shift. They lower acquisition costs, activate faster, and capture higher wallet share. Unsurprisingly, CBCCs already punch above their weight in spends and revenue contribution.

Yet, when you examine issuer portfolios, a pattern emerges. Most banks restrict themselves to a handful of large, marquee partners. Everything else – mid-tier brands, regional players, category specialists, seasonal ecosystems – remains largely untapped.

The question is: why?

The Myth That Only Marquee Partners Scale

The prevailing belief inside banks is that only large national brands justify the effort of a co-brand. It is worth re-examining whether this assumption still holds water in today’s market.

Mid-tier and regional brands often enjoy deeper loyalty, higher repeat frequency, and far stronger customer trust within their niches. Collectively, they represent enormous spend pools. What they lack is not customer relevance, but operational feasibility under today’s co-brand models.

Each new CBCC program is still treated as a bespoke project – custom origination flows, partner-specific reward logic, separate compliance reviews, manual reconciliation, and fragmented servicing responsibilities. Launch timelines stretch into months. Innovation becomes painful. Unsurprisingly, banks ration these efforts, reserving them for the largest partners.

In effect, banks are optimising for ease of execution, not maximising opportunity.

For a deeper look at these constraints and the design principles behind partner-scale programs, read our latest whitepaper:  Shattering the Co-Brand Glass Ceiling

The Real Bottleneck is The Operating Model

Most CBCC programmes today are constrained by operating models built for a different era – one where cards were uniform products, loyalty was an overlay, and partners were an afterthought.

Legacy platforms were never designed for multi-partner orchestration, rapid configuration, or continuous experimentation. As a result:

• Onboarding a new partner is heavy and manual
• Reward structures are rigid and one-size-fits-all
• Compliance is bolted on, not embedded
• Customer journeys fracture across bank and partner apps
• Banks end up invisible, while partners own the customer relationship

The irony is that CBCCs are supposed to differentiate banks. Instead, technology constraints push banks into identical, repetitive constructs – accelerated rewards on partner spends, delayed redemption, and little room for innovation.

Taken together, these dynamics create an artificial ceiling on how far co-branded programmes can scale.

Concentration Risk Disguised As Focus

By limiting CBCCs to a few marquee partners, issuers also introduce concentration risk – in acquisition channels, spend categories, and revenue streams. A change in a partner’s strategy, regulatory stance, or commercial terms can materially impact portfolio performance.

A diversified CBCC portfolio – spanning categories, ticket sizes, and customer cohorts – is structurally more resilient. But diversification requires scale, velocity, and low marginal effort per programme. Without that, banks default to caution.

What Banks Need To Change Now

Breaking this ceiling does not require more aggressive marketing or better rewards. It requires a fundamental shift in how CBCCs are conceived.

First, banks must stop treating co-brands as isolated programmes and start treating them as a portfolio business. The objective should not be to launch ‘the next big co-brand’, but to build the capability to onboard, manage, and evolve dozens – even hundreds – of partners over time.

Second, the operating model must shift from bespoke builds to configuration-led, partner-centric platforms. Partners should be able to participate deeply – defining reward logic, launching campaigns, embedding journeys – within bank-defined guardrails. Compliance, disclosures, and risk controls must be embedded by design, not revisited for every launch.

Third, CBCCs must evolve beyond rewards into embedded loyalty infrastructure – spanning pricing, EMIs, lifecycle services, family or group constructs, and post-purchase engagement. This is how cards become default instruments rather than situational ones.

Finally, banks must accept that modernization is no longer optional. Legacy systems are not just slowing execution; they are actively shaping conservative strategy choices.

The Ceiling Can Be Lifted

None of this is theoretical. The technology, patterns, and adjacent market precedents already exist. What is missing is the willingness to rethink long-held assumptions about scale, control, and complexity.

Co-branded credit cards are no longer a niche distribution play. They are fast becoming the primary growth engine for the next phase of India’s card market. But unless banks dismantle the artificial constraints they have built around them, much of that opportunity will remain unrealised.

Our recent whitepaper, Shattering the Co-Brand Glass Ceiling, lays out the practical blueprint for how banks can re-architect their co-brand strategy in detail.

The opportunity is real. The ceiling is self-imposed. And the next phase of growth will belong to banks willing to redesign how co-brands actually work.