Google foraying into digital lending space by roping in fintech players

Google had rolled out the Spot feature in September 2019, which allows businesses to set up virtual stores on GPay.
Tech giant Google is foraying into the digital lending space, which is set to become a $1-trillion opportunity in the next five years, according to sources. Its digital payments app GPay is forming partnerships with fintech firms and has already onboarded ZestMoney to offer credit to consumers, signalling a larger interest to tap the financial services market in the country.

Bengaluru-based ZestMoney is now integrated on GPay’s digital store’s Spot platform to offer credit to customers. This feature will allow customers to avail credit with ZestMoney from GPay directly.

“Google has indirectly entered the digital lending space,” said a person familiar with the matter. “ZestMoney is live on GPay and several thousand applications have already been received.” With this integration completed, ZestMoney is the first digital lender to enable sign-up with GPay. Customers can register themselves, complete KYC norms and check their eligibility for a credit limit without having to go through the ZestMoney website or app.

Once approved, ZestMoney EMI (equated monthly instalment) can be availed at its 3,000-odd online and offline merchants. The feature is available on Android, whereas the iOS version will be launched in coming months, according to the sources.

Google had rolled out the Spot feature in September 2019, which allows businesses to set up virtual stores on GPay.

Sajith Sivanandan, business head, GPay and Next Billion Users initiatives, India, said the Spot platform helps merchants across different categories, from retail to financial services, create experiences for consumers on GPay.

“We’re partnering widely within the fintech ecosystem with financial services providers such as 5Paisa, ZestMoney, and Groww, to name a few, while continuing to build on other categories as well, expanding the Spot platform’s footprint further in the coming months,” said Sivanandan.

Salman Waris, managing partner at TechLegis Advocates and Solicitors, said from a regulatory perspective, the Reserve Bank of India has allowed the financial services industry, including banks and fintech players, to roll out such financial products on a small scale for testing their viability before scaling up. “This has allowed lenders to experiment with innovative solutions like digital lending or deferred payment services at speed with regulatory backing,” said Waris.

An email query to ZestMoney remained unanswered till the time of going to press. Founded by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman in 2015, ZestMoney is one of the fastest-growing consumer lending fintech firms in India. It aims to improve the lives of more than 300 million households who have no access to credit cards or any other formal financing options.

As more customers in India get used to the idea of shopping and transacting online, a large portion of them will also begin seeking credit digitally. The Boston Consulting Group (BCG) estimates that because of these developments, India’s digital lending market represents a $1 trillion opportunity in the next five years.

GPay’s rivals such as Amazon Pay, Walmart-owned PhonePe, Paytm, and Facebook-owned WhatsApp are also betting big on this space. In April, Amazon launched ‘Amazon Pay Later’, a service that extends a virtual line of credit to eligible customers. It partnered digital lender Capital Float and The Karur Vysya Bank for this.

WhatsApp is the latest entrant in the digital lending space. Abhijit Bose, WhatsApp India head, recently announced plans to foray into lending, micro-insurance and pension products. Alibaba-backed Paytm is also planning to scale up its online lending business across the country.

ZestMoney is among several other players on GPay’s Spot platform, including Dunzo, Urban Company, Zomato, and Ola. People familiar with Google’s strategy said it may even look at taking equity stakes in these companies.


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