Citigroup is working on a partnership with Grab, Singapore's app that has become one of Southeast Asia's most successful start-ups. It allows credit card holders to use points to pay for rides.
The initiative, the first time anywhere in the world that Citi has integrated its credit cards with a transportation app, is part of a broader move by the US bank to tap the vast networks of customers built up by ride-hailing and messaging apps in Southeast Asia, according to a report in the «Financial Times» (article behind paywall) this weekend.
One of the bank’s goals is to cut customer acquisition costs at a time when credit card providers are shifting from traditional direct selling — often done through street sales at shopping malls in Asia — to digital channels.
Crucial to Boosting Profitability
The partnership also marks the growing importance in the region of ride-hailing apps, which are moving beyond transport to offer a broader range of services from mobile wallets to food delivery.
Grab, which operates across six countries in Southeast Asia, has raised $700 million since it launched in 2012, making it one of the best-funded start-ups in the region.
Citi regards winning ride-hailing customers as crucial to boosting profitability, as these recurrent purchases are more lucrative for card providers than one-off retail purchases.
Harpreet Grewal, Asia-Pacific product director for Citi, said to the «Financial Times»: «For us to embed our products into this ecosystem on an ongoing basis is strategically important as [Asia] converts from cash to cards».
Launched in September
The partnership is due to be launched in the region from September. Citi is also planning to embed a payments service into the Line messaging app, which is popular in Thailand.
