Google expands consumer engagement in India with UPI-linked card

Google is expanding its focus on consumer finance in India with the launch of a UPI-linked credit card, betting in a country of over 1.4 billion people where less than 50 million have credit cards.

On Wednesday, Google entered India’s growing credit card market with the launch of Flex and Google Pay, partnering with private lender Axis Bank to boost access to credit at UPI-enabled payment terminals in the country.

India’s rapid adoption of digital currency through the government-backed Unified Payments Interface (UPI) has changed the way consumers pay but it hasn’t meant access to more credit. This difference has led to technology companies and banks setting up loans to widely used software, which helps explain Google’s progress.

Flex by Google Pay is offered digitally through the Google Pay app and can be used online and at physical merchants, the company said. Built on the Indian government-backed RuPay network, the card also includes a rewards program based on actual “stars” for transactions, with each Star worth ₹ 1. Users can manage their spending and bills within the app, choose to pay back the entire amount or convert it into installments, and manage security settings such as blocking the card or resetting the PIN.

The launch builds on Google Pay’s efforts to expand access to credit in India, where it has already done so cooperation with banks and non-bank lenders to provide personal information and Gold loans through the app. As one of the world The most used platforms for UPIGoogle Pay gives Axis Bank access to a large, digitally savvy user base at a time when lenders are focusing on expanding credit distribution through technology platforms instead of physical branches.

Although Google has started with Axis Bank, it wants to add other partners soon to expand its credit card offering in India.

Card prices, including interest and applicable fees, vary by user and credit history, with no fees, Google said, adding that fees associated with repayment options are displayed in the app. Prepayment charges are also applicable for EMI changes, and late charges will be levied as per the policy of the issuing bank.

The credit card market in India is growing rapidly in recent years. The number of premium cards has grown by around 14% over the past three years to around 110 million, while the number of customers and traffic has increased by around 30%, according to a recent study. PwC report (PDF). Average annual spending on a card has increased from about ₹132,000 (about $1,450) to about ₹192,000 (about $2,100), meaning cards are being used more often for casual payments rather than big-ticket purchases.

Despite the growth in the number of successful credit cards and spending on credit cards in India, this expansion has been largely driven by existing users rather than an increase in the number of owners. Google wants to help bridge this gap by bringing new users to the credit card system, especially those interested in traditional credit card payment methods. “It’s the same users who are getting more and more in debt,” said Sharath Bulusu, director of product management at Google Pay, adding that the flexible payment system was designed to ease the worry of unexpected repayments for first-time credit users.

“We think that now we understand the problem, the location is the best user to solve something special,” Bulusu told TechCrunch, explaining the time of Google.

Google’s move comes amid growing competition in India’s credit card market, where companies including Amazon, as well as Walmart’s Flipkart and PhonePe, already offer similar products. Online shopping platforms such as food service companies Swiggy and Zomato, along with online travel companies including MakeMyTrip and Yatra, have also replaced partnerships with banks.

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

Along with the launch of popular cards, Google is also launching “Pocket Money,” a feature of the Google Pay app that allows parents to give children limited access to electronic payments. Powered by the newly launched UPI Circle functionality, the feature allows parents to set up a maximum of Rs 15,000 per month or approve the child’s activities.

Parents receive notifications for each transaction and can view past payment history or disable access to the app through their Google Pay app, the company said. The move could also help Google expand the use of Google Pay and its potential market in India, where it is it competes closely with Walmart-backed PhonePe among the leading UPI platforms in the country.

Google’s Pocket Money follows in the footsteps of Indian fintechs such as FamPay and Junio, which aim to get kids digital using payment cards. However, unlike prepaid tools, Google uses the UPI Circle framework to allow parents to manage the money up to the time the transaction is made, instead of raising money in advance.

“With UPI Circle, the money stays in the parent’s account until it is used,” Bulusu said, adding that the system makes families already comfortable using Google Pay to introduce children to digital payments. He said the show represents a bigger bet on payment apps that are seen as a way to build financial confidence among younger users as digital payments become more popular.

Google is also promoting small business transactions on Google Pay, allowing customers to rate merchants directly after the transaction, and highlight the corresponding location on Google Maps merchant listings. The company is also offering AI-powered ads within the Google Pay for Business program that helps merchants create and launch ads.

More than 530 million unique users have paid at least once through Google Pay, while more than 23 million small merchants have been on board the platform over the years, Bulusu said. That reach, he added, gives the company confidence that it can introduce new financial products to users who are open to using digital technology.