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ICICI Bank starts virtualizing issuance of credit cards; implications

ICICI Bank has a new product called Instant Credit Card where certain pre-approved customers of the bank will be able to get a virtual credit card much before the physical card is delivered to them. A physical card will be sent to the customer’s address in 5-7 days. The bank is issuing these new cards with the upcoming festival season in mind, so that customers can start using the virtual credit card (i.e. the credit card number) on shopping sites.

Customer can get a credit card with a credit limit of up to Rs 4 lakh based on pre-checked bureau scores. This is available to Visa, MasterCard and American Express cards. The bank adds that customers can also make in-store purchases through Samsung Pay by linking the virtual credit card.

The facility to apply for the virtual card is on the bank’s netbanking page.

Customers need to enter the following information:

  • Name, email, phone number, and date of birth.
  • Choose which card they want.
  • Enter a postal address.
  • Generate the card which gives them 16 digit number which they can start using for shopping.


– Trying to beat rivals: Right now, its rival HDFC Bank has the maximum number of credit cards in circulation with 9.03 million. Meanwhile, ICICI Bank has 4.34 million credit cards. Following the 2008 crisis, ICICI Bank started consolidating its credit card portfolio due to the rising number of frauds, which led to a significant decline in its card base. Our chart from 2011, illustrates the decline in its credit card base, declining by over 50% between January 2009 and March 2011:

The bank lost more than Rs 11 crore due to over 8,000 cases of fraud and saw non-performing assets balloon. One of the reasons for the increased fraud was the lax KYC by banks and lack of proper credit scores.

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In this case, ICICI Bank will be giving these cards only to their savings bank customers and with a pre-checked bureau score. This ensures proper KYC and credit worthiness.

– Newer credit companies: Meanwhile, the bank will also have to contend with newer credit companies such as EarlySalary. These companies are targeting salaried customers and typically charge a similar interest rate as credit cards. As such the bank KYC process is more burdensome and customers will look for newer avenues of credit.

(Nikhil adds: this reminds of a great Freakonomics podcast on managing money )

– E-commerce sales: Through August to December, e-commerce companies will be running discounts on products. Many users shy away from large purchases such as high-end mobile phones, TVs and home theatres due to the lack of payment plans. Flipkart is now offering EMIs on debit cards on high-value purchases. Banks do not want to lose out on innovation in payments to e-commerce companies. 

Other virtual cards

Note that virtual cards are not a novelty and many companies have introduced them to increase shopping on online websites.

– Airtel Payments Bank does not issue a physical debit card but has a virtual card which can be used for online shopping.

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– FreeCharge had launched FreeCharge Go last year which functioned as a virtual card which could be used to make payments across all online merchants in India, in association with YES Bank.

– In December 2015, Paytm partnered with ICICI Bank to launch virtual prepaid cards which could be used by wallet users at both offline and online stores for purchases. The virtual card could be used at any retail organization which accepted Visa, MasterCard and RuPay.

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