Pay Later, Cardless Credit Benefits Grew Over 30% In 2019: Flipkart Fintech Head

Walmart-owned ecommerce company Flipkart has been expanding its growth avenues with its next-phase of focus on leveraging fintech to strengthen its presence. The results have started coming in as Smrithi Ravichandran, head of business for fintech and payments group at Flipkart, said that the company is able to cater to 65 Mn customers out of the base of 200 Mn customers.

Ravichandran told Business Standard that Flipkart aims to significantly multiply the number of users with access to its fintech products and services. This includes tier-2 and tier-3 cities, where it is seeing a lot of traction. She said that the company has adopted a three-pronged strategy to tap the fintech market.

This reportedly includes enabling frictionless payment at scale using data insights, distribution and technology, and enabling credit especially to tier-2 and tier-3 customers and helping them buy aspirational products of their choice.

Ravichandran said that ‘Flipkart Pay Later’ and ‘Cardless Credit’ grew more than 30% in 2019 and its seller lending programme, ‘Growth Capital’ grew 70% in 2019.

“Driving credit access and penetration is very critical and core focus (for Flipkart) and we would continue to heavily invest in the next couple of years,” said Ranjith Boyanapalli, head of fintech and payments group at Flipkart. “The reason we are extremely confident and want to invest is that we have the right distribution and technology capabilities and the right insights to make this happen.”

Flipkart has been conducting a range of fintech experiments. In January 2020, Flipkart partnered with Visa to integrate Visa Safe Click (VSC), an in-app device-based payment authentication feature. VSC in Flipkart’s app will help users complete online payments without entering one-time passwords (OTP) for purchases up to INR 2K. Any order above INR 2K will involve the same OTP method as has been prevalent so far.

In December 2019, it was reported that Flipkart is in the process of applying for a non-banking financial company (NBFC) license to back up PhonePe. Flipkart’s new entity is likely to be a lending platform for buyers and sellers. The platform will be enabled with a cardless credit, buy-now-pay-later features and checkout finance. In addition, the platform will also reportedly provide working capital loans to sellers, among other things.

In July 2019, Flipkart partnered with Axis Bank to launch the co-branded credit card, powered by Mastercard’s payments architecture. Flipkart claimed this improves access to credit for some of its customers, who may not be able to get loans or credit cards from traditional banks. In January 2018, with Flipkart Pay Later, the company began providing short-term credit for users to pay for the products on the ecommerce platform.

A Credit Suisse report claims that the Indian digital payment sector is expected to grow five-fold and reach $1 Tn by 2023. DataLabs by Inc42 noted that with $2.6 Bn in total funding, fintech startups recorded 125 deals in 2019. The funding amount is 71% higher than 2018 whereas the deal count plunged by 9% compared to the previous year with Delhi NCR taking the lead.