After Paytm, Ola Has Also Entered The Credit Card Business

We learned that a couple of days ago, Paytm, the largest wallet app in India, started a credit card business. And now, the Indian giant ride-hailing company Ola is doing the same thing. Just yesterday, it announced signing a deal with state-run State Bank of India (SBI) and Visa to release up to 100 lakh credit cards in the upcoming 3.5 years.

With this move, Visa and SBI will be able to gain more customers in India where most people are still using cash. For Ola, this is a new way for it to monetize users.

Ola currently has around 15 crore users and conducts over 20 lakh rides a day, which means it holds a mountain of data on the financial power and spending figures of its customers. The company will use the card, called Ola Money – SBI Credit Card, to offer discounts as well as savings to maintain its customer’s loyalty.

According to the company, holders of its credit cards will get the highest cashback and rewards as Ola Money, which they can use to pay for Ola rides, flights, or hotel bookings. Users will get a 7% cash back when using cabs, 5% when booking flights, 20% when booking domestic hotels, 6% when booking international hotels, 20% on over 6,000 restaurants, and 1% on the other spends.

Talking to TechCrunch, Ola’s CEO of financial services Nitin Gupta said that the rewards it’s offering customers would be five times as high as the current average.

The company also said that some users have already got the car and it will soon invite other eligible users. According to Ola’s CEO and co-founder Bhavish Aggarwal:

Why did Ola choose credit cards?

It looks like Ola is following rivals Go-Jek and Grab’s footsteps to invest in several businesses in recent years. Both the rivals offer insurance, remittance, and loans to their customers and Grab still maintains its own virtual credit card. Notably, Uber also offers credit cards, but it’s not present in India.

With this move, Ola will go beyond a food delivery and ride-hailing firm, as stated by Forrester analyst Satish Meena.

In the past few years, Ola has begun exploring financial service. Its riders are offered with micro-insurance covering several risks which include medical expenses and baggage loss. Earlier this year, it said that over 20 million insurances had been sold to customers. Through Ola Money’s cashback, it will also underscore Ola’s effort to push more customers to the user its mobile wallet, threatening other wallet and payment apps like Paytm.

Plus, the company has significantly pushed its electric vehicles business, which it introduced earlier 2019 as a separate firm. Back in March, Ola’s EV business successfully raised $300 million from Kia and Hyundai. Its plan is to offer 10 lakh EVs by 2022. It also has plans to release 10,000 rickshaws to India’s cities.