Google Pay Will Give Loans To Indian Businesses; 15 Cr Connections On Google My Business Per Month!

US-based technology giant Google announced today that it is all set to launch a credit feature for small and medium enterprises (SMEs) on its payment platform Google Pay

This will help the small businesses weather the pandemic economic crisis and also find a business model for its mobile payments service.

Read on to find out more about the new feature…

Google’s Plans On Expanding in the SME Market With Its New Feature!

The rollout, in partnership with top Indian lenders, will go live by the end of 2020 and help over 30 lakh verified merchants avail instant credit on their Google Pay app, if the bank partners deem them credit worthy.

The new feature will be one of the many ongoing and upcoming initiatives that Google has planned in order to gain market share in India’s rapidly digitising SME segment amid the ongoing COVID-19 pandemic.

This move comes as part of Google’s efforts to share its broader initiatives for SMEs in India.

The development also comes at a time when big technology firms have turned aggressive in capturing India’s profitable, yet underpenetrated SME sector, by offering abundant services.

Earlier this month it was reported that Google Pay had about 7.5 crore transacting users in India, more than any of its competitors. 

Google Pay already leads the Indian UPI market having processed over 50 crore of the total 123 crore transactions in May, 2020 on the National Payments Corporation of India (NPCI)-operated channel.

How Will This Feature Work?

Credit will be given to merchants on a pre-approved basis – similar to its instant consumer loan feature launched in 2018. The liability of underwriting and collection would be on partner lenders. Although these partner lenders are not known yet.

Ambarish Kenghe, senior director for product management, Google Pay, in an exclusive interview said, “In these unprecedented times, we are doing a variety of things to help merchants and consumers.” 

He added, “To this end, we’re working with our partner financial institutions to surface their loan offerings for merchants, which can be availed right within Google Pay, something that is especially pertinent in these uncertain times.”

Google Pay’s consumer loan product is live with banks such as HDFC Bank, ICICI Bank, Federal Bank, Axis Bank and Kotak Mahindra Bank.

“The discussions are still in early stages and we are yet to devise a timeline for a formal launch; the expectation, however, is to go live before the end of the year,” said Kenghe. “The loan product will be offered by the financial institutions and the emphasis is to ensure that the merchant has full control and visibility of the loan application process.”

Additionally, Google Pay is also seeking to attract larger merchants onto its platform.

“There are more than 60 (6 crore)  million SMEs and 30 million (3 crore) merchants and retailers in the country,” he said. “It’s an important space for us where many transactions happen. We are very focused on helping the merchants during these times. The first piece is enabling the merchant with digital payment facilities.”

Google’s Expansion Worrisome For Its Peers?

The announcement also highlights the hold Google has on small businesses in India, and how its scale and resources could pose additional challenges for scores of local startups that are already attempting to serve businesses.

In recent years, Paytm, PhonePe and BharatPe have taken under lakhs of merchants and offered them a range of services including loans. They are pushing out value-added services to attract unbanked and undigitized merchants – who are looking to take their physical business online – onto their respective platforms.

Earlier this year, Paytm, which works with over 1.6 crore merchants, launched a range of gadgets, including a device that displays QR check-out codes that comes with a calculator and USB charger, a jukebox that provides voice confirmations of transactions and services to streamline inventory management for merchants.

For some of these players, Google’s increasingly growing interest in targeting merchants means that they will be facing off the search giant on two fronts. 

Despite Google Pay leading UPI transactions in India, Google along with other payment platforms in India is struggling to find a business model for their services.

Google’s global rival, Facebook has onboarded more than 10 lakh merchants in India on its WhatsApp’s business app. WhatsApp, which is the most popular app in India, is informally used by countless additional merchants in the country.

The competition in the space has intensified with Facebook’s investment in Reliance Industries-owned Jio Platforms. Its popular messaging service, WhatsApp, will look to facilitate commerce through JioMart and integrate WhatsApp Pay, building an ecosystem for smaller retailers. 

Amazon Pay, too, has been pushing to bring offline merchants onto its platform.

For merchants, more players the merrier. Small businesses in India continue to struggle to secure working capital from financial institutions such as banks.

The Features and Initiatives Led By Google For SMEs So Far!

The company said Google My Business, an app it launched in India in the second half of 2017 to help mom and pop stores and other small merchants build online presence, has been used by more than 2.6 crore businesses in the country to list themselves on Google search and Maps. 

“Every month we drive over 150 million (15 crore) direct connections between these businesses and customers including calls, online reservations and direction requests,” company executives said.

Last year Google launched Spot feature in India that allows businesses to easily create their own branded commercial fronts that are accessible to customers through Google Pay app.

In May, Google introduced Nearby Stores as a Spot feature on Google Pay app that allowed local businesses in select parts of the country to be discovered by customers in their neighborhood. The company said it is expanding this offering across India starting today.

It has seen large merchants such as Zomato, Grofers, MakeMyTrip, 5 Paisa and Dunzo come on stream. “The emphasis now is to get smaller merchants onboard,” said Kenghe.