OneCard is lifetime

Metallic credit cards are a novelty where plastic abounds. So far though, banks and credit card companies have come up with very few metallic ones. But these are exclusively premium cards laden with prohibitively expensive annual fees. So, when fintech startup FPL Technologies launched a lifetime-free (LTF) metal credit card, OneCard, in 2020, it grabbed eyeballs.

“Metal credit cards have a feel-good factor. For long, OneCard’s USP (unique selling point) was that it’s an entry level card in metal form, a first of its kind," said Kashif Ansari, assistant professor at Jindal School of banking and finance, O P Jindal Global University .

Three years on, the noise has died down because its reward rate and discount offers, the most attractive features of a credit card, pale in comparison to other cashback cards in the market.

OneCard earns one reward point (RP) on every ₹50 spent. The value of 1 RP on redemption is ₹0.10. As part of the card’s accelerated reward programme, the cardholder will earn 5X rewards on top two spend categories in a month. This is applicable when the cardholder spends on at least three different categories in a month, so the app picks the two highest spend categories and awards accelerated points on those. For instance, if you paid ₹5,000, ₹8,000 and ₹6,000 towards groceries, fuel and online shopping, respectively, in a month, you will qualify for 5X rewards on fuel and online shopping. However, if you pay for groceries and fuel alone the next month, you will not be eligible for accelerated rewards since you did not pay for a third category..

The base reward rate on OneCard is abysmally low at 0.2%. In comparison, entry level cards such as SBI cashback card and ICICI Amazon Pay card offer 1-5% base reward rate.

Apart from earning rewards on spends, OneCard also occasionally offers 5-20% instant discounts on online shopping, food delivery platforms, travel booking sites, etc. These offers can be found on the OneCard mobile app. Yet, Sumanta Mandal, founder, TechnoFino, said OneCard’s brand tie-ups are not as wide as banks. “ICICI has the widest network of brand tie-ups, so ICICI Amazon Pay cards offer the best discounts and other benefits on online shopping. OneCard offers lucrative deals during festival sales," he said.

FPL Tech offers OneCard in collaboration with Federal Bank, South India Bank, CSB Bank and BOB Financial.

Is it worth having one?

Ansari said OneCard is suitable for beginners whose credit card applications are rejected by banks. “OneCard has low entry barriers. People with low cibil scores also get approved. Those without a Cibil history can easily get it against an FD," he said.

Another upside, though minor, is that it directly earns rewards on categories like utilities, fuel, fees, insurance premiums, etc, which some sought-after entry level cards, like SBI cashback and ICICI Amazon Pay card, don’t allow. With these cards, the workaround is to buy Amazon or Flipkart vouchers and pay for exempted categories through these.

The biggest draw is that you get to own a metal card without huge annual fees. However, the downside is that it has an expensive re-issuance fee of ₹3,000 (goods and services tax is extra) if you lose the card or damage it. “My metal OneCard has gotten damaged twice already. One can still use it for online transactions but not for payments on POS terminals. You can get a plastic card as a replacement at a lower fee," said Mandal.

The company touts a low forex mark-up of 1% on foreign transactions. But, Mandal warns against transacting overseas with OneCard because of the company’s poor customer service. “OneCard’s customer service is not good so you may not get resolution for your grievances if you raise a dispute. For international transactions, it’s safe to transact with a bank credit card," he said.

Mint independently checked several credit card community forums where people raised similar concerns about the company’s unresponsive customer care service.

The financials

FPL Technologies’ losses widened to ₹182.8 crore in FY22, from ₹33.2 crore in FY21, as per their filings with MCA. The widening losses are attributed to the rise in marketing expenses, among others. OneCard spent over ₹124 crore on promotional expenses in FY22 against ₹11.8 crore in FY21.

It is difficult for a fintech company to build a sustainable credit card product that offers a decent reward rate because it doesn’t have deep pockets like banks and has limited avenues to make money. “Fintechs can only earn from MDR and interest on defaults. A fintech can never compete with banks, which also earns from cross-selling other products," said Ansari.

OneCard did not respond to Mint’s query on its user base and the number of active cards currently.