Letter # 83

Once we start seeing the credit cards’ business as a combination of (a) payments and (b) loans, the challenge becomes visible. Payments have close to zero take-rate, and with full implementation of India Stack (already underway), the loans will start getting democratized. When the data becomes fully fungible (via AA and OCEN), the ‘moat’ is lost; and a business that breaks even in under 2 years will become ripe for disruption.

In my article in ET today, I discuss the business model of credit card issuers, how they seem to be losing the digitization wave over the last five years, and how their business can soon face huge challenges. Read here: Digital India: India’s digital revolution is pushing credit cards out of the arena – The Economic Times (indiatimes.com)

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