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Flipkart to offer instant credit to users without credit access

Flipkart has launched ‘Cardless Credit’, a service where users will get instant credit of up to Rs 60,000 for 3 and 12 months. With this service, the company hopes to target the 45 million Flipkart users that do not have access to any form of credit, its senior vice-president Ravi Garikipati said.

The amount of credit users can avail is based on their credit history and shopping patterns on Flipkart. Flipkart has not revealed how much interest it will charge on these products. Users can allegedly avail credit within 60 seconds and during checkout, they will have an option to either pay the entire amount ‘later next month’, or via EMIs. Cardless Credit is an extension of the ‘Pay Later’ programme that Flipkart had launched earlier this year.

Flipkart’s foray into financial services

In July, we reported that Flipkart had already applied for an NBFC license. However, it seems that the company hasn’t yet applied for it and may do so in the coming weeks: Flipkart will not only lend directly to customers, but also tie up with other financial institutions to offer credit based products.

It also plans to offer credit services outside its platform and will introduce more financial products in the coming months, according to another report by the Economic Times. In November last year, the company was set to launch insurance services on the platform. Flipkart is looking to co-create insurance products aligned with e-commerce, such as mobile protection insurance including theft and damage, and return shipping coverage for sellers.

Competition with Amazon

Flipkart’s move comes days after arch rival Amazon also launched a similar credit service. Amazon will offer credit to users who do not have access to credit services or credit cards, to make purchases via EMIs for up to Rs 60,000. Amazon claims to offer zero cost EMIs for customers taking loans for a duration of 3 and 6 months, while an interest rate of 18% will be levied on customers opting for a duration of 9 and 12 months.

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In an interview with Business Standard, Amit Agarwal, Amazon’s India chief suggested that the US online behemoth could also offer soon start a lending service. “If you don’t really have a financial institution that can give you credit, then we will give you credit because we know you so much more because you come to us every day,” Agarwal told Business Standard.

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