Google is deepening consumer credit payment in India with a UPI-linked card

Google is expanding its consumer finance efforts in India by launching a UPI-linked credit card, betting on a country of more than 1.4 billion where fewer than 50 million currently hold a credit card.

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

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

Flex by Google Pay is issued digitally through the Google Pay app and can be used online and at physical merchants, the company said. The card, built on the Indian government-backed RuPay network, includes a rewards program that adds virtual “stars” on transactions, with each star worth INR 1. Users can monitor spending and bills within the app, choose to pay off balances in full or convert them into installments, and manage security settings such as card blocking or PIN reset.

The launch builds on Google Pay’s broader efforts to expand access to credit in India, where it has already done so In partnership with banks and non-bank lenders to Personal presentation and Gold-backed loans Through the application. As one of the country Most widely used UPI platformsGoogle Pay provides Axis Bank with access to a large digitally active user base at a time when lenders are increasingly looking to expand credit distribution through technology platforms rather than physical branches.

While Google has started with Axis Bank, it aims to add more issuance partners soon to expand its co-branded credit card offerings in India.

Prices on the card, including interest and applicable fees, will vary by user and credit profile, with no application fees, Google said, adding that fees associated with payment options appear up front in the app. Processing fees apply to EMI transfers, and late payment fees will be charged in line with the policy of the issuing bank.

The credit card market in India has witnessed rapid expansion in recent years. The number of outstanding cards has witnessed an annual growth of about 14% over the past three years, reaching about 110 million cards, while transaction volumes and values ​​increased by nearly 30%, according to the latest report. PricewaterhouseCoopers report (PDF). Average annual spending per card has risen from approximately INR 132,000 (about $1,450) to approximately INR 192,000 (about $2,100), indicating that cards are being used more frequently for routine payments rather than occasional large ticket purchases.

Despite the growth in the number of outstanding cards and spending on credit cards in India, the expansion has been largely driven by existing users rather than a significant increase in the number of cardholders. Google aims to help bridge this gap by bringing new users into the credit system, especially those who are wary of traditional card payment structures. “It’s the same users who are taking out more and more credit,” said Sharath Pulosu, senior director of product management at Google Pay, adding that the flexible payment options are designed to ease concerns about unexpected bills for first-time credit users.

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

Google’s move comes amid increasing competition in India’s co-branded credit card market, where companies including Amazon, as well as 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 including MakeMyTrip and Yatra, have also entered the space in partnership with banks.

Co-branded credit cards accounted for about 12-15% of India’s total credit cards in the financial year ending 2024, and are expected to account for more than a quarter of the market by volume by 2028, growing at an annual rate of 35-40%, according to a report. a report (PDF) Prepared by Redseer Consulting.

Along with the launch of the co-branded card, Google is also rolling out “Pocket Money,” a feature in the Google Pay app that allows parents to give children limited access to digital payments. This feature, built on the recently introduced UPI Circle functionality, allows parents to set a maximum monthly spending limit of up to INR 15,000 or approve individual child-initiated transactions.

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

Google’s Pocket Money feature comes on the heels of previous efforts by Indian fintech companies such as FamPay and Junio, which sought to enable digital spending for children through prepaid cards. However, unlike prepaid tools, Google uses the UPI Circle framework to allow parents to retain control of the funds until the moment the transaction is made, rather than loading the funds up front.

“With UPI Circle, the money stays in the parent’s account until it’s spent,” Buloso said, adding that this approach makes it easier for families to use Google Pay to introduce kids to digital payments. He said the feature reflects a broader bet on familiar payments apps as a way to build financial confidence among younger users as digital payments become more prevalent.

Google is also upgrading the small business experience on Google Pay, allowing customers to rate merchants directly after a transaction, with those reviews synced to the merchant’s Google Maps listing. The company is also rolling out 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, Boloso said. He added that this access gives the company confidence in its ability to offer new financial products to users who already feel comfortable in digital transactions.