Fintech majors are counting on co-branded cards in returns play
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Major Indian fintechs operating on the UPI network are expanding their credit portfolio to generate steady revenue from the business as the government continues to provide UPI payments free of cost.Google Pay, the second largest UPI payment application, is working on building a co-branded credit card product in partnership with Axis Bank , according to two people in the know.This comes after Google Pay launched gold loans with Muthoot Finance late last year and personal loans before that on the popular payment application. Google Pay offers personal loans between Rs 30,000 to Rs 10 lakh with tenures between six months to six years. For gold loans, Google just acts as a sourcing channel, where customers can reach out to Muthoot Finance and secure a doorstep appointment.Google Pay and Axis Bank did not respond to ET's queries.Recently PhonePe, the most popular UPI payment application, launched a co-branded credit card in partnership with HDFC Bank "This is mostly a distribution strategy from the likes of Google Pay. Fintechs which help source a credit card customer for banks can get around ₹1,000 to ₹1,200 as a sourcing commission," said a founder of a lending startup that works with multiple fintechs to source customers.These fintechs have a large base of customers who are engaging with the app on a regular basis, so the idea is to find out means of cross-selling products to this customer base, according to industry insiders."In terms of scale these UPI apps would be disbursing around Rs 50 crore per month, while they get good volumes from customers checking their credit scores, not many of them actually qualify for a loan through these apps," said a second founder who also runs a digital lending startup.In a single quarter, Paytm , which as a consumer-facing app runs one of the most successful lending operations, disburses around Rs 1,500 crore in personal loans.Fintechs get two major things out of these partnerships, one is they build stronger engagement with their customers and second, they generate a commission for sourcing a customer for these lenders. As per industry estimates, a personal loan product carries a commission of around 2% of the amount disbursed and for gold loan it would be less than 0.3%.For the US-based technology giant, Indian fintech play has been mostly restricted to running the payments app, which processes around 6.5 billion transactions monthly. But now, as revenue generation through core payments becomes tougher every day, Google is also opening up to offering more credit products and scaling them up.Amazon, another American tech giant active in the Indian fintech ecosystem, runs a successful co-branded credit card in partnership with ICICI Bank with more than five million users and is looking to secure a non-banking finance company licence by acquiring Axio (previously Capital Float).
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