Flipkart launches cardless credit, may apply for NBFC license

Bengaluru: Ahead of the Diwali festive season, Flipkart has launched a new so-called cardless credit programme for consumers that will give shoppers access to an instant credit line of up to ₹ 60,000 to buy products on the e-commerce marketplace.

Flipkart may also apply for a new NBFC (non-banking financial company) licence, as part of its broader strategy of building a full-fledged financial services business that will drive significant growth for the online retailer.

In an interview with Mint, senior vice-president Ravi Garikipati, who heads the fin-tech business at Flipkart, said that the company would take a two-pronged approach to consumer lending—once it receives the NBFC licence, it will lend directly to consumers’ and also through partnerships with other NBFCs and financial services firms.

“The next phase of growth in online retail is going to come from tier-2 and tier-3 markets. And we are working on fundamental innovations to enable that growth,” said Garikipati, who has held a number of roles at Flipkart over the years, including that of chief technology officer (CTO).

“A big percentage of our target consumer base does not have access to formal credit…. For them, conventional financial institutions are not a viable option. And that’s where we see an opportunity,” added Garikipati.

As part of the new cardless credit initiative, Flipkart will allow customers to sign up for a credit line, through a simple application process. Depending on credit history and past shopping patterns, customers will be given an instant credit line of up to ₹ 60,000. For customers who purchase products on Flipkart, they will be given an option to either pay the entire outstanding amount later during the month, or through easy monthly instalments (EMIs).

The cardless credit initiative is part of a broader strategy from Flipkart to bet big on fin-tech. In an interview in January, Flipkart chief executive Kalyan Krishnamurthy had said the firm would look to launch more financial services for consumers, akin to what it did last year with schemes such as equated monthly instalments (EMIs) on debit cards, without sharing further details on what the programmes would look like.

Mint had also reported in January that Flipkart and its payments arm PhonePe are undertaking different strategies to build out their respective fin-tech businesses, as part of a broader strategy to solve different problems for online consumers and avoid competing against each other.

Flipkart is not the only one betting big on fin-tech. Over the past two years, Amazon has been aggressively investing in building its fin-tech and payments business in India and has invested in several payments and fin-tech startups to boost its own offerings. Earlier this year, it had invested $22 million in digital lending firm Capital Float and followed it up by a $12 million infusion into digital insurance start-up Acko. In May, Mint reported that Amazon had backed digital payments start-up ToneTag.