Google deepens consumer credit in India with UPI-linked card | TechCrunch

Google is expanding its consumer finance business in India with the launch of a UPI-linked credit card, tapping into a country of over 1.4 billion people where less than 50 million people currently have a credit card.

On Wednesday, Google entered the growing co-branded credit card market in India with the launch of Flex by Google Pay, in partnership with private lender Axis Bank to expand access to credit in the country’s UPI-driven payments ecosystem.

India’s rapid adoption of digital payments through the government-backed Unified Payments Interface (UPI) has transformed the way consumers pay, but has not translated into widespread access to credit. That gap has created an opportunity for tech companies and banks to integrate lending into widely used payment apps, which helps explain Google’s move into this area.

Flex by Google Pay is issued digitally through the Google Pay app and can be used online or at physical merchants, the company said. The card is built on the Indian government-backed RuPay network and includes a rewards program that awards virtual ‘stars’ to transactions, with each star worth ₹1. Users can track expenses and bills in the app, choose to repay balances in full or convert them into installments, and manage security settings such as blocking the card or resetting a PIN.

The launch builds on Google Pay’s broader efforts to expand access to credit in India, where it is already working with banks and non-bank lenders to offer personally and gold-backed loans through the app. As one of the most widely used UPI platforms in the country, Google Pay provides Axis Bank with access to a large, digitally active user base at a time when lenders are increasingly looking to scale credit distribution through technology platforms rather than physical branches.

While Google has started with Axis Bank, it is looking to add more issuer partners soon to expand its co-branded credit card offering in India.

Prices on the card, including interest and applicable fees, vary by user and credit profile, with no application fees, Google said, adding that fees associated with repayment choices will be displayed upfront in the app. EMI conversions are subject to processing fees and late payment fees will be charged as per the policy of the issuing bank.

The Indian credit card market has grown rapidly in recent years. The number of cards outstanding has grown about 14% annually over the past three years to about 110 million, while transaction volumes and values ​​have increased by almost 30%, according to a recent report. PwC report (PDF file). Average annual spend per card has increased from about ₹132,000 (about $1,450) to about ₹192,000 (about $2,100), indicating that cards are being used more often for routine payments than for occasional large purchases.

Despite the growth in the number of outstanding cards and credit card spends in India, the expansion is largely due to existing users and not a meaningful increase in the number of cardholders. Google wants to help close this gap by bringing new users into the credit system, especially those who are wary of traditional card repayment structures. “It’s the same users who are getting more and more credit,” said Sharath Bulusu, Google Pay’s senior director of product management, adding that flexible repayment options are designed to address concerns about unpredictable billing for new credit users.

“We think we now understand the problem, the space and the user well enough to solve something unique for them,” Bulusu told TechCrunch, explaining Google’s timing.

Google’s move comes amid increasing competition in India’s co-branded credit card market, where companies like Amazon, Flipkart and Walmart-owned PhonePe already offer similar products. Consumer internet platforms such as food delivery companies Swiggy and Zomato, along with online travel companies such as MakeMyTrip and Yatra, have also entered the space in partnership with banks.

Co-branded credit cards accounted for approximately 12 to 15% of the total credit cards in India in the financial year ending 2024 and are expected to capture over a quarter of the market by volume by 2028, with an annual growth rate of 35 to 40%. report (PDF) by consultancy firm Redseer.

In addition to the launch of the co-branded card, Google is also introducing ‘Pocket Money’, a feature in the Google Pay app that allows parents to give children limited access to digital payments. Based on the recently introduced UPI Circle functionality, this feature allows parents to set a monthly spending limit of up to €15,000 or approve individual transactions initiated by the child.

Parents will receive notifications for each transaction and can view spending history or pause access to the feature through their own Google Pay app, the company said. This move could also help Google broaden Google Pay’s usage and addressable market in India, where it is located competes closely with Walmart-backed PhonePe one of the leading UPI platforms in the country.

Google’s Pocket Money feature follows previous efforts by Indian fintechs such as FamPay and Junio, which sought to enable children’s digital spending through prepaid cards. However, unlike prepaid instruments, Google uses the UPI Circle framework to let parents retain control of the money until the time a transaction is made, instead of loading money upfront.

“With UPI Circle, the money stays in the parents’ account until it is spent,” says Bulusu, adding that the approach makes it easier for families already comfortable using Google Pay to introduce children to digital payments. He said the feature reflects a broader push on well-known payment apps as a way to build financial confidence among younger users as digital payments become more widespread.

Google is also improving the small business experience on Google Pay, allowing customers to rate sellers immediately after a transaction, with those ratings synced to the seller’s Google Maps listing. The company is also introducing an AI-powered advertising feature within the Google Pay for Business app that helps merchants create and launch ads.

More than 530 million unique users have made at least one payment through Google Pay, while more than 23 million small merchants have joined the platform over the years, Bulusu said. That reach, he added, gives the company confidence that it can introduce new financial products to users already comfortable with digital transactions.