When the Singhs -- Sonam and Manjeet -- began their bickering last November, it was not over the choice of restaurant or holiday destination. The couple scuffled over just one issue -- to spend or not spend.

Manjeet wanted to buy a home theatre system, Sonam branded jewellery, and their 10-year-old wanted a playstation.

Between them Sonam and Manjeet have three credit cards but because they hate paying interest on credit, these are used for petrol, groceries, books, clothes and restaurant bills, and the money is paid before the due date so no interest is charged by the bank.

A 5 per cent cash back offer by ICICI Bank [Get Quote] on its credit cards helped the Singhs make up their minds. Manjeet calculated that the 5 per cent cash back would take care of the interest to be paid on the rollover of credit, so all three items were bought. Cash back is a well accepted feature in developed markets and in the US it is even used in place of reward points.

"We believe in giving more," says V Vaidyanathan, senior general manager-retail, ICICI Bank. A former Citibanker, Vaidyanathan has been heading the retail division of the bank since 2000.

On January 1 this year, ICICI Bank touched the 3 million mark in terms of number of credit cards, galloping ahead within four years of its launch of pioneer Citibank (2.5 million cards), the global leader in credit cards, even though Citi had started the race as far back as 1995.

ICICI Bank had been determined to attain the number one position in the credit card market -- it was already the market leader with other retail products such as home loans, car loans and two-wheeler loans. "When we reached the 3 million mark we were not surprised; but we surprised the rest of the world," chuckles Vaidyanathan.

However, the stacking is not as simple as it seems. Even though Citibank has conceded to second position in terms of card issuances, both Citibank and ICICI Bank claim to be numero uno in terms of spends.

ICICI Bank asserts an average of Rs 32,000 as annual spends per card (comparable to that of more advanced markets like Taiwan and Malaysia) when Visa says average spends per card across the Indian industry is only Rs 17,000. Citibank declines to give any numbers on spends but claims to be number one all the same.

"We are top of the league according to Visa numbers," says T R Ramachandran, business manager-cards, global consumer group, Citigroup.

Confused? Well the only independent source of data is the annual industry survey 2004 conducted by consumer payment processing company Venture Infotek.

In March 2004, the survey showed Citibank to be the market leader with 26 per cent of the total spends of Rs 20,555 crore (Rs 205.55 billion) and ICICI Bank a poor third with just 12 per cent, behind Standard Chartered at 15 per cent.

(Standard Chartered Bank has made a claim to be number one on another parameter -- revolving credit, which for the bank is as much as Rs 1,540 crore (Rs 15.40 billion), ahead of ICICI Bank's Rs 1,000 crore (Rs 10 billion). Both Citibank and SBIremain elusive on the revolving credit figure.)

ICICI Bank saw its spends shoot up by 36 per cent during the last three months of 2004. "A combination of factors was responsible for the jump -- the high spending festival season and three simultaneous promotional programmes," points out Vaidyanathan.

The bank ran three no-holds-barred campaigns simultaneously -- 5 per cent cash back on all purchases over Rs 2,000; a lucky draw for a couple to the seven wonders of the world; and the chance to win a Mercedes E240 worth Rs 38 lakh (Rs 3.8 million).

By any standard, it was a meticulous strategy. The bank has its POS terminals (the point of sales machines on which credit/debit cards are swiped to make payments at retail establishments) at 35,000 locations.

The cash back scheme was launched nationwide after three months of testing across these merchant establishments. Five-star hotels and shopping malls registered the highest spends.

ICICI Bank has built up the most extensive network of sales, service infrastructure and collection mechanism for credit cards across 107 cities including smaller towns like Vapi, Valsad and Bhuj in Gujarat and Siliguri in West Bengal.

Not that competition was keeping quiet. As soon as ICICI Bank came out with the cash back scheme, Citibank decided to introduce a new cash back card on the lines of its popular Citibank dividend card in the US.

ICICI Bank, which has more promotions in the pipeline, now claims to add up to 100,000 new customers every month while Citibank adds 80,000-90,000 and State Bank of India [Get Quote] adds 70,000-75,000 cards per month. "Thanks to all the promotions, the customer pull for the card has increased," says Vaidyanathan.

Roopam Asthana, CEO, SBI-GE cards, hits the nail of the problem when he says, "We don't want to grow at the expense of profitability."

The 5 per cent discount was fully borne by ICICI Bank, but even without any special offer Asthana claims to be growing at twice the speed of the industry with monthly sales having surged 100 per cent since the start of this fiscal.

No one can deny the accelerated pace of growth in credit cards, but reach is still a problem. ICICI Bank, which has the most extensive network, is limited to just 107 cities.

The State Bank, the largest in the country with over 9,000 branches, has its credit card business only in 45 cities. Citibank, which operates in 40 cities, is planning to scale it up to the 94 cities in which group company Citifinancial operates.

Having reached the top, ICICI Bank is not complacent. "We have the largest number of cards but the question is how do we get the volumes (spends) up," says Vaidyanathan. Citibank's Ramachandran is not concerned about small targets.

"It's about who reaches the 10 million mark first," he says. Wait and watch for the ultimate winner -- Citibank which considers the credit card turf a marathon, or ICICI Bank which sprinted to the top with electrifying speed.

MONEY FROM THE CARD A bank typically needs a minimum customer base of 1 million card holders to break even, given that the initial set up costs for running a credit card business is about Rs 200 crore. A bank does not make money until a customer actually starts swiping his plastic and revolving credit. The revolving of credit happens when a customer does not pay the entire bill amount and pays interest on the remaining dues. That's when a bank's cash registers start ringing. The interest rate varies from as low as 1.49 per cent to as high as over 3.00 per cent a month. Each time a customer swipes the card at a merchant establishment, the issuing bank earns a commission of about 1.1 per cent of the value of the transaction. The annual fees take care of the bank's expenditure involved in sending out monthly statements to the customer and paying payment facilitator Visa/MasterCard fees