Google Expands Consumer Credit Efforts in India with UPI-Linked Card

Google is making a bigger play for the consumer finance market in India by introducing a credit card that links to the Unified Payments Interface (UPI). This move targets the vast Indian market, where, despite a population exceeding 1.4 billion, fewer than 50 million people possess a credit card.

Google's entry into India's co-branded credit card sector involves a partnership with Axis Bank, a private lender. The "Flex by Google Pay" card aims to broaden credit access within India's UPI-driven payment ecosystem.

India's widespread embrace of UPI for digital payments hasn't yet translated into widespread credit access. Google sees this gap as an opportunity. By embedding lending options within its popular payments app, Google, like other tech companies and banks, hopes to capitalize on this untapped potential.

The Flex card is issued digitally via the Google Pay app and can be used for both online and in-store purchases. It operates on the RuPay network and features a rewards program where transactions earn "Stars," each worth ₹1. Users can track spending, manage bills, choose between full repayment or installment plans, and adjust security settings within the app.

This launch builds on Google Pay's existing efforts to expand credit access in India. The app already offers personal and gold-backed loans through partnerships with banks and non-bank lenders. By partnering with Axis Bank, Google Pay provides the bank with access to a large, digitally active user base. Lenders are increasingly seeking to expand credit distribution through technology platforms rather than relying solely on physical branches.

While the initial launch is with Axis Bank, Google intends to add more issuing partners to broaden its co-branded credit card offerings in India.

The card's pricing, including interest and charges, will vary based on the user's credit profile. Google states there is no application fee, and all charges related to repayment options are displayed upfront in the app. EMI conversions incur processing fees, and late payment charges are applied according to the issuing bank's policy.

India's credit card market has seen substantial growth, with the number of outstanding cards increasing by roughly 14% annually over the past three years, reaching approximately 110 million. Transaction volumes and values have risen by nearly 30%, according to a recent PwC report. Average annual spending per card has increased from about ₹132,000 (around $1,450) to roughly ₹192,000 (about $2,100), indicating more frequent use for everyday payments.

Despite this growth, the expansion has largely been driven by existing users spending more, rather than a significant increase in the number of cardholders. Google aims to address this by bringing new users into the credit system, especially those who may be hesitant about traditional card repayment structures. Sharath Bulusu, a senior director at Google Pay, noted that flexible repayment options are designed to alleviate concerns about unpredictable billing for first-time credit users.

Bulusu explained that Google believes it understands the Indian market and its users well enough to offer a unique solution.

Google's entry occurs amid growing competition in India's co-branded credit card market. Companies like Amazon, Flipkart (owned by Walmart), and PhonePe already offer similar products. Other consumer internet platforms, such as food delivery services Swiggy and Zomato, and online travel companies like MakeMyTrip and Yatra, have also partnered with banks to enter this space.

Co-branded credit cards accounted for an estimated 12–15% of India’s total credit cards in the financial year ending 2024. Consultancy firm Redseer projects that these cards will capture over a quarter of the market by volume by 2028, growing at an annual rate of 35–40%.

In addition to the co-branded card, Google is launching "Pocket Money," a Google Pay feature that allows parents to grant children limited access to digital payments. Built on the new UPI Circle functionality, parents can set a monthly spending limit of up to ₹15,000 or approve individual transactions initiated by their child.

Parents receive notifications for each transaction and can monitor spending history or disable access to the feature via their Google Pay app. This move could help Google broaden Google Pay's usage and market reach in India, where it competes closely with PhonePe among the leading UPI platforms.

Google's Pocket Money feature follows similar efforts by Indian fintech companies like FamPay and Junio, which sought to enable children's digital spending through prepaid cards. That said, the reality is a bit more complicated. unlike prepaid cards, Google uses the UPI Circle framework, allowing parents to retain control of funds until a transaction occurs, rather than loading money in advance.

Bulusu emphasized that with UPI Circle, the money remains in the parent's account until spent. He added that this approach makes it easier for families already comfortable with Google Pay to introduce digital payments to their children. He sees this feature as part of a broader strategy to build financial confidence among younger users as digital payments become increasingly common.

Google is also enhancing the experience for small businesses on Google Pay. Customers can now rate merchants directly after a transaction, and these reviews will sync to the merchant's Google Maps listing. The company is also rolling out an AI-powered advertising feature within the Google Pay for Business app to help merchants create and launch ads.

Bulusu stated that over 530 million unique users have made at least one payment through Google Pay, and over 23 million small merchants have joined the platform. This reach, he believes, gives Google confidence in its ability to introduce new financial products to users already comfortable with digital transactions.