Flipkart launches cardless credit facility ahead of Big Billion Days sale

Flipkart's new feature will give customers access to an instant credit line of Rs 60,000 which they will be able to repay either as EMIs or as a single payment by the 15th of the next month

In the run up to next month's festive sale, Walmart-backed e-commerce marketplace Flipkart has followed in the footsteps of rival Amazon to introduce a card-less credit facility for its customers, in an attempt to boost big-ticket purchases on its platform.     

Flipkart's new feature will give customers access to an instant credit line of Rs 60,000, which buyers will be able to repay either as EMIs or through one-time payment by the 15th of the month after purchase. The company said the feature would give an added 6-7 million customers on its platform access to credit for the first time.

“We are looking at ways to reach out to the next set of consumers, and made a strategic call to focus on Tier II and Tier III markets. When we consider the opportunity, one of the things we need to address is to help make buying more affordable for these prospective consumers,” said Ravi Garikipati, senior vice-president and head of financial services at Flipkart.

Flipkart said of the 100 million odd customers on its platform today, 45 million did not have access to any formal credit. While not all of those consumers will be able to access the company's new card-less credit feature, the company's aim is to address the gap.

Banks are not able to meet the credit needs of customers, said Garikipati. Flipkart has built proprietary algorithms and uses artificial intelligence and machine learning to determine who to lend to, he said. This is then passed on to lending partners, who have tied up with Flipkart to make the credit available.

The e-commerce firm has a first loss default guarantee (FLDG) agreement with the lenders, and the credit worthiness of customers will be assessed only by Flipkart itself. "Since we're targeting new-to-credit consumers, we can't really wait for them to take credit in order to evaluate their creditworthiness. Our algorithms look at several other parameters to decide this," Garikipati said.

Flipkart did not disclose who its partners will be for making its new credit product available to consumers. 

The company had previously said that it was in the process of applying for its own NBFC licence, which would allow it to lend from its own balance sheet.

Through its new credit facility, Flipkart is hoping to get customers to make big- ticket purchases during its upcoming Big Billion Days sale. RedSeer Management Consulting estimated that e-commerce sales during this Diwali period could touch $4 billion, largely driven by deals and discounts offered by Amazon and Flipkart.