E-commerce giant Flipkart’s interest in finance has been growing steadily as it has now begun offering personal loans to customers, expanding its financing offerings in a move that could potentially boost sales even as its chief rival Amazon has signaled a slowdown in India.
Flipkart in partnership with lender Axis Bank, is extending a credit of up to 500,000 Indian rupees, or $6,100, according to a description on its app. The loan, requiring no document submission and boasting a 30-second approval time, promises customers a seamless borrowing experience, the app says. The service was first spotted by the Indian news outlet The Arc.
By introducing personal loans, Flipkart expands its financial services portfolio, which already includes a ‘buy now, pay later’ option and a co-branded credit card. E-commerce giants, that have partnered with Bajaj Finance and other lenders like banks over the years, have long realized that a broader financing option is required to address the customer’s frugality and credit aversion in India.
A financing option reduces the immediate burden, thereby promoting higher transaction volumes and bolstering customer loyalty. By empowering consumers to make big-ticket purchases and stagger payments, these services boost spending, driving significant revenue growth.
The new loan offering puts Flipkart ahead of PhonePe, its former subsidiary. The two are now independent companies under Walmart, and PhonePe is yet to offer its personal loan product. The competition between the companies has intensified after PhonePe’s foray into e-commerce earlier this year.
