Friday, June 13, 2014

Marketing Myopia : ICICI bank charging fee for rewards redemption

Last day when I got my ICICI credit card bill, an interesting notice was enclosed along with the bill. The notice stated that from June 12, the redemption of my reward points which was accumulated  because of the " Loyalty Program" of ICICI bank will attract a charge of Rs 99 + tax. 

Oh really .... What the hell !!

This comes from one of the largest marketing machine in the Indian banking industry and I am totally confused about the logic of this move. Then I happen to read an article in Business Standard and was happy to know that even the journos doesn't have a clue as to what is happening. 

First things first. 

ICICI bank in a way pioneered the concept of rewarding the consumers for their banking transactions. Where reward points existed for credit cards, ICICI introduced reward points for savings bank too and for that they partnered with Payback which facilitate the reward management. 
In my understanding, reward programs are considered an effective way to increase brand loyalty. It is a common method used by marketers to reward loyal and regular customers. There are two sides to rewards. 
Firstly it rewards the existing customers to use more of the service or product and also it acts as an incentive for new customers to be loyal to the product. The thumb-rule is that the rewards must be enticing enough to encourage the customer to see value in being loyal.
Here the smart brains of ICICI bank loyalty program has decided to charge the customers who wants to redeem the loyalty points earned. 
Does it make any sense ???  
First the bank says that you will be rewarded with Payback points if you use the credit card and uses reward points as an incentive to become a loyal customer and then charge the customer when it comes to actual redemption.  It is short-termism at its best. 
You are going to charge the customers for being loyal ?? Common dear marketer , you must be living in the seller's market which is dead a decade ago. 

Another factor is the reward itself. If the reward one gets from the Payback was superb, then 99 INR may be justified but what you get for 1000 reward points is a silicon egg beater or a Prestige LPG hose  ( what a wonderful reward)  for which I need to pay additional  Rs 99 + tax. 

Although I have a Payback card , I have never bothered to look at the points because the so called rewards are no-rewards. So am I bothered about the Rs 99 charge, no because I don't intend to redeem it .  
But as a marketer, what ICICI bank is right now doing is defying all theories. 


  1. This is something a new form of marketing. I am more concern about Internet Marketing . Because this technique brought brought some incredible and tremendous change in Marketing industry.

  2. Anonymous2:19 PM

    This is unfortunately aslo done by SBI

  3. Anonymous8:37 PM

    Fact is that they are not only charging customers for rewards received while using ICICI credit cards, but also for redeeming rewards received while using PAYBACK cards used at some outlets. It shows that ICICI Bank wants to grab somehow some money from its loyal customers. But they have also think the other way too. PAYBACK card is an independent entity and all the PAYBACK cardholders are not holding ICICI Bank accounts. So, if existing ICICI Bank customers cancel their ICICI Bank credit cards and then redeem PAYBACK reward points in stores, ICICI Bank can do nothing. Thus they are bound to loose their reputation, also loyal customers. This is not marketing, but loosing the market to the competitors.

  4. Anonymous8:37 PM

    I agree, its a foolish move. I redeemed my points for Vodafone prepaid voucher of Rs.110 and I got a bill of Rs. 112 as charge (99+12).
    Im not sure how can they just charge it and what sense does it make. I have stopped using my ICICI card from now on and also in process to shift my salary account as well

  5. I was charged 29+ in ICICI SB Account for redeeming payback points against vodafone prepaid recharge..

    It make sense , If I payback charge any redemption fee why would i be charged for redeeming my payback points in ICICI.
    Is Payback a child concern of ICICI and jointly looting public ?

    ICICI Bank & PAYBACK India Are you listening ?

    Prabakaran Kuppusamy


  7. I was charged Rewards Redemption Handling Fee of Rs.25 + service Tax of Rs. 3.09 for shopping on
    This is simply ridiculous. Customers are charged for being loyal to ICICI Cards.
    I am having 10 credit cards of various banks. But i was loyal to ICICI Card. But now onwards i won't be.

    I will now start using other credit cards except ICICI.

    I wanna show my middle finger to that shitty marketing brain in ICICI bank top management.

    This is nothing but robbing off customers. This type of shitty move might increase your profitability for a while but in the long run you will be doomed.

    Next move, I am closing my demat account with ICICI.

    Step by step i will stop using ICICI Bank's services.

  8. I'd like to know if anyone is still reading this post. I contacted the RBI Ombudsman with a formal, legal complaint. However, ICICI Bank reversed their charge. Is anyone willing to fight the bank with me on this? Either directly or in courts? (I am a lawyer)

  9. 4) However, by an email dated May 16, 2014 (For contents, see Annexure C), ICICI Bank stated that as a part of its policy, it would start charging a redemption fee w.e.f. June 12, 2014 on every redemption request for PAYBACK Points. ICICI Bank however failed and still fails to give any option to customers to opt-out/de-link the PAYBACK Card number from the ICICI Bank programme. In effect, ICICI Bank started treating all customers of PAYBACK who had previously linked their PAYBACK Card to their ICICI Bank in the hope of getting points from ICICI Bank as if they were ICICI Bank customers exclusively. It is to be noted that the said redemption fee was to be charged on all PAYBACK numbers including those linked under the 27.9.2012 offer and for points earned through non-ICICI Bank sources.

    5) For example, if someone had swiped their Payback issued Magnetic Swipe Card or quoted their number online and thereby earned 10,000 Payback points each year in 2010, 2011, 2012, and 2013, he would have 40,000 points by the end of 2013 which would be worth approx. Rs 10,000/-. All such points may have been earned through purchasing fuel in cash, buying flight tickets at, making purchases as Pantaloons, buying movie tickets at, or paying Vodafone mobile bills and other retail partners without ICICI Bank being in the picture. However, if such person decided to link his EXISTING PAYBACK card to their ICICI Bank pursuant to the 27.9.2012 offer even as late as May 2014, then, after June 12, 2014, the redemption of his PAYBACK points at all merchants such as Vodafone, HPCL, BigBazaar, Pantaloons, etc. and by using his PAYBACK issued Payback Magnetic Swipe Card would end up being charged by ICICI Bank. Thus, ICICI Bank failed to distinguish between PAYBACK Points earned by swiping Payback issued cards and PAYBACK Points earned by using ICICI Bank issued credit/debit cards. ICICI Bank under its policy of May 16, 2014 wrongfully started charging amounts on a person’s savings account for redeeming points neither earned through ICICI Bank channel nor redeemed through ICICI bank channels.

    6) It is submitted that ICICI Bank thus wrongfully assumes that (a) by agreeing to link their Payback card number pursuant to the 27.9.2012 offer, every customer of Payback India had handed over their points to ICICI Bank and become amenable to charges levied by ICICI Bank for redeeming PAYBACK Points; (b) Reward points of ICICI Bank and PAYBACK Points were one and the same thing as if existing PAYBACK Points as on the date of linking had apparently been converted into ICICI Bank Reward Points; and (c) PAYBACK Points earned by a customer for using ICICI Bank products/services far outweighed the combined PAYBACK Points given for using all ICICI Bank products

    7) It is pertinent to note that Payback India itself does not charge any amount for redemptions, and ICICI Bank remains the only bank to charge for such amount.

  10. 8) Thus, whereas the offer to link Payback number to their ICICI Bank account was a “bait” to attract customers; once there were sufficient customers on board, a policy was enacted charging the redemption of points “switching”. Such bait and switch is an unfair and deceptive business practice as such been deficient in banking services. Such deficiency continues as long as the redemption policy exists.

    9) It is submitted that without providing any option to delink Payback Card number from the ICICI Bank account on or after June 12, 2014 or treating PAYBACK points earned from non-ICICI sources and ICICI sources as one and the same, and charging redemption fees, ICICI Bank has commingled PAYBACK Points and has thus acted unfairly and unreasonably as such been deficient in banking services. Such deficiency continues as long as the redemption is charged for redeeming PAYBACK Points for earned from non-ICICI Bank sources.

    10) It is further clarified that the Terms and Conditions for the MySavings Reward program of ICICI Bank (available at ) [Annexure D] or the basic literature of ICICI Bank MySavings Rewards (available at ) [Annexure E] fail to disclose any redemption fee. In fact, the Terms and Conditions expressly state that the “Program is complementary” and “all tax(es) or charges payable to the Government or any other authority…. shall be borne by the Customer/s.” The thrust of the rewards program is that all loyalty points are connected to Payback India and not ICICI Bank. Therefore, the occasion to charge the redemption of such points do not exist.


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