Key Points
- Amazon and Flipkart are launching financial services in India to compete with banks.
- Amazon is targeting small businesses with tailored loans after acquiring a local lender.
- Flipkart is focusing on “buy-now, pay-later” options for its online shoppers.
- A recent regulatory change by India’s central bank now allows it to lend directly.
Amazon and Walmart-owned Flipkart are jumping into India’s financial scene, preparing to offer loans and payment plans that will put them in direct competition with the country’s traditional banks.
Amazon, after acquiring a local lending firm named Axio, is gearing up to offer loans specifically for small businesses.
Mahendra Nerurkar, an Amazon vice president, said the company sees “tremendous headroom for expanding credit growth in India.” He explained that they plan to develop specialized lending products to help merchants manage cash flow and unlock capital. This move builds on Amazon’s existing financial services, which already include partnerships to offer fixed-deposit savings products to its customers.
Meanwhile, Flipkart is focusing on the popular “buy-now, pay-later” (BNPL) market for its shoppers. After registering its own lending arm, Flipkart Finance, it is now waiting for the final green light from the Reserve Bank of India (RBI). The company plans to offer shoppers interest-free monthly installment plans and loans for big-ticket items like electronics, with interest rates ranging from 18% to 26%.
This major push was made possible earlier this year when the RBI allowed these tech giants to lend directly to customers through their own units, a significant opening of India’s financial market.
Their biggest advantage is data. Both companies have a treasure trove of information on what millions of customers buy and what sellers move, giving them a unique edge in assessing credit risk. An expert from Grant Thornton noted their potential to “make a dent” is immense because they own data on both buyers and sellers, but stressed that good execution will be crucial.
