Secured and co-branded credit cards are two kinds of credit card. A secured credit card is backed by a fixed deposit, so that people with no credit history can get a first card. A co-branded credit card is issued by a bank together with another company, such as an airline, a shopping app or a travel brand, and gives that company's rewards.
First, the secured card. A credit card lets you spend now and pay the bank later. Usually a bank gives a card only to people with a good credit score. But you cannot build a credit score without credit. A secured card breaks this circle. You put money in a fixed deposit (FD) with the bank, and the card's limit is set against it, usually 75 to 90 percent of the FD amount. If you do not pay your bill, the bank can recover the money from the FD.
Consider a first-year job holder in Indore with no credit history. He opens a fixed deposit of ₹20,000 through a fixed deposit platform. The bank issues him a credit card with a limit of ₹18,000. His FD keeps earning interest. He uses the card for his phone bill and groceries, and pays the bill in full each month. The bank reports these payments to a credit bureau. After about a year, he has a credit score, and he can apply for an ordinary card or a loan. He can watch his score grow with credit score monitoring apps.
Now the co-branded card. The bank lends the money and carries the risk. The partner company, such as a travel app, designs the rewards and finds the customers. For example, a travel card may give travel points on every booking. The partner benefits because its customers spend more with it. The bank benefits because it gets new cardholders.
Fintech companies often run both kinds of card for a partner bank. They build the app, the sign-up flow and the rewards. Behind them, a card issuing platform creates the cards, approves each payment and produces the monthly bill. Cards issued on the RuPay network also work on UPI, as a credit line on UPI.