Google deepens consumer credit push in India with UPI-linked card

In a significant move to enhance consumer finance in India, Google has unveiled a UPI-linked credit card called Flex by Google Pay. This initiative targets a vast population of over 1.4 billion people, where currently, fewer than 50 million possess a credit card. The launch, announced on Wednesday, marks Google’s entrance into India’s expanding co-branded credit card market. Collaborating with Axis Bank, a private lender, Google aims to widen access to credit within the country’s thriving UPI-driven payment landscape. While digital payments have surged thanks to the Unified Payments Interface (UPI), access to credit remains limited, presenting a unique opportunity for tech firms and banks to integrate lending into popular payment applications. Flex by Google Pay is designed for digital issuance through the Google Pay app, enabling users to make purchases both online and at physical stores. The card operates on the government-backed RuPay network and features a rewards program that allows users to earn virtual “Stars” worth ₹1 each on their transactions. Users can track their spending, manage bills, and have the flexibility to repay in full or convert amounts into installments, alongside customizable security settings such as PIN resets and card blocking. This launch is part of Google Pay’s broader initiative to improve credit access in India, where it has previously partnered with various banks and non-bank lenders to offer personal and gold-backed loans. With Google Pay being one of the most popular UPI platforms, Axis Bank stands to benefit from access to a large, digitally savvy customer base, especially as lenders aim to enhance credit distribution through digital channels. While the initial partnership is with Axis Bank, Google plans to onboard additional issuer partners to broaden its co-branded credit card offerings in India. The card's pricing, including interest and fees, will vary based on individual credit profiles, with Google ensuring transparency in repayment options through its app. India's credit card market has exhibited rapid growth recently, with the number of active cards increasing by approximately 14% annually over the past three years, reaching around 110 million. Transaction volumes have risen nearly 30%, and average annual spending per card has increased significantly, indicating a shift towards routine usage. Despite this growth, much of the expansion has come from existing credit card users rather than new cardholders. Google seeks to bridge this gap by introducing more users to the credit system, particularly those hesitant about traditional repayment methods. Sharath Bulusu, Google Pay’s senior director of product management, emphasized that the flexible repayment options aim to alleviate concerns for first-time credit users. As competition intensifies in India’s co-branded credit card sector, with players like Amazon and Flipkart already in the game, Google’s entry is timely. Co-branded cards accounted for 12–15% of the total credit cards in the financial year ending 2024, and projections suggest this could rise to over a quarter by 2028. In addition to the credit card launch, Google is rolling out a new feature called “Pocket Money” in the Google Pay app, which allows parents to give their children controlled access to digital payments. This feature is built on the newly introduced UPI Circle functionality, enabling parents to set monthly spending limits while retaining control over their funds until transactions are approved. Moreover, Google is enhancing the merchant experience on Google Pay, allowing customers to leave ratings after transactions, which will be reflected on the merchants' Google Maps listings. The introduction of an AI-driven advertising tool within the Google Pay for Business app will help merchants create and manage ads more effectively. With over 530 million users making transactions through Google Pay and more than 23 million small merchants on the platform, Google is poised to introduce new financial products that cater to a digitally engaged audience, further solidifying its role in India’s digital economy.