Flipkart’s lending dream: Can Super.money be a super start as e-tailer eyes Paytm, Paisabazaar’s turf?
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Synopsis
Late last year, PhonePe split from Flipkart to become an independent entity. That has pushed Flipkart to ramp up its fintech vertical. Some early moves have now become visible as Flipkart starts with loan distribution on its platform. Industry members believe the two could now compete on many fronts.
Flipkart has long wanted to sell more than just apparel and phones to customers. Armed with deep insights on customers’ shopping patterns, the Walmart-owned e-commerce company recently ventured into personal loans. In partnership with Axis Bank, Flipkart started offering loans worth up to INR10 lakh through its app in July this year. Within the first month of its launch, Flipkart was facilitating as much as INR10 crore in loans every day,
Flipkart has long wanted to sell more than just apparel and phones to customers. Armed with deep insights on customers’ shopping patterns, the Walmart-owned e-commerce company recently ventured into personal loans.In partnership with Axis Bank, Flipkart started offering loans worth up to INR10 lakh through its app in July this year. Within the first month of its launch, Flipkart was facilitating as much as INR10 crore in loans every day, according to sources. The company had partnered with the private lender in 2019 to launch a co-branded credit card.“In July 2023, Flipkart took a significant step forward by launching a personal loan offering in collaboration with Axis Bank,” a company spokesperson said in a statement to ET Prime. “This strategic partnership underscores Flipkart's commitment to enhancing customer experiences by expanding its services beyond e-commerce,” the statement added.Interestingly, as part of its fintech play, Flipkart is now also backing a separate entity within the group to start distributing personal loans and evolve into an independent credit marketplace. This will take the Flipkart group into the realm of players such as Paytm and Paisabazaar, which also help lending partners in loan origination and distribution.Headed by senior Flipkart executive Prakash Sikaria, the new offering, which is likely to be named ‘Super.money’, will offer personal loans. The current relationship contract that Flipkart’s arm Flipkart Advanz has with Axis Bank could also be transferred to the new entity, sources suggest.Sikaria, in fact, was on his way out last year to launch a startup, as ET Prime had first reported, when he got an opportunity within the Flipkart group to launch a new business.Sikaria used to head newer growth initiatives at Flipkart, leading verticals such as Shopsy while also being a part of the e-commerce firm’s rewards offering called SuperCoins. Currently, Flipkart, which is infusing close to USD20 million into Supermoney, will hold a majority stake in the new entity while Sikaria holds the remaining. Super.money could explore external investors over the next year, sources say.Flipkart and Sikaria did not comment on the new entity. Risk strategyAkin to several other platforms which facilitate loans, Flipkart’s new entity is not taking any risk, at least initially. “At the initial stage, it will be more of an ad-tech, distribution play, because Flipkart and Super.money will not be taking any risk right away, not even through a first loss default guarantee or FLDG programme,” a source aware of the companies thinking tells ET Prime.In June this year, the Reserve Bank of India (RBI) approved the FLDG programme though it capped the amount at 5% of the total loan value. This essentially lets the fintech player compensate the lender for a default.While currently Flipkart’s new lending entity will not take risks on loans, it will gradually move in that direction, according to sources. “They will get into more risk, eventually, and their slight independence from Walmart and the plan to bring in external investors will let them take that risk,” the person cited above adds. According to sources, Flipkart is also looking to get a non-banking finance company (NBFC) licence, though discussions about the same have been underway for at least three years now.The new lending business is housed under a separate legal entity, Scapic, within the Flipkart group. Scapic was an AR/VR startup Flipkart had acquired in 2020, which has since been integrated with the main platform. Given Flipkart’s nearly 300-million customer base, many of the loans will be based on the spending patterns and shopping behaviour on the main platform. “Every consumer platform wants to increase the stickiness of customers and reduce friction when it comes to completing a transaction and offering diverse products,” says a fintech analyst, who did not wish to be named. “This is also a common practice of integrating the commerce arm with financial services, like Alibaba has done,” he adds. Several credit marketplaces such as Paisabazaar and Paytm also act as distributors of credit for their financial partners on which they earn commissions.For Paytm, the high-margin lending business has helped it move towards profitability in recent quarters.Collection is a significant part of the lending business, though ET Prime was not able to get full clarity on the process at Flipkart.The Arc, which first reported on Flipkart’s personal loans foray, said that the company could utilise its logistics arm to help in loan recovery. However, ET Prime couldn’t immediately ascertain this.Incidentally, there's already a lending app by the name SuperMoney, which lends to gig workers and contract workers. It is not clear whether there will be trademark issues and whether Flipkart will finally go with the name 'Super.money' for the new venture. 103997129Fintech after PhonePeFlipkart’s fintech play has so far largely been around PhonePe ever since it acquired the company in 2016. But late last year, PhonePe split from Flipkart to become an independent entity, pushing the latter to ramp up on the fintech side.Industry members believe the two could now compete on many fronts. PhonePe also recently entered the e-commerce space with its ONDC-focused app, Pincode.Having offered credit and insurance for a long time through partners, Flipkart is not new to fintech. It also has its own Buy Now Pay Later (BNPL) product and is launching a third-party UPI app to catch up with rival Amazon which launched its UPI app much earlier. Parent company Walmart, too, has been active in fintech over the past few years.In early 2021, Walmart announced a new fintech venture in partnership with fintech investment firm Ribbit Capital. Last year, reports suggested Walmart-owned Los Angeles-based fintech startup, One, was set to pilot banking services within the group. (Graphic by Sadhana Saxena)