I was and am under the impression that the main chunk of income to the card issuing bank is from the commercial establishments who pay a certain pre negotiated trade commission to the bank for each sale (depending on the item) along with service charges(split between bank and card network platform like VISA) for the transaction value. The bigger banks like HDFC are able to get larger trade commissions and offer ‘cash backs’ to promote their subscriber base. They surely won’t do it from their own pocket.
It is an interesting topic and any input on this from a person having subject knowledge would be helpful in clearing cobwebs and assess cashflows from credit card business.
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