India’s retail landscape already one of the most competitive in the world is seeing its biggest players shift from selling products to funding purchases. Amazon and Flipkart, long rivals in eCommerce, are now competing in a new arena: digital lending and consumer finance.
In late November 2025, both companies unveiled moves that could reshape India’s fast-growing credit market. Amazon is expanding into small business loans, while Walmart-owned Flipkart prepares to roll out buy now, pay later (BNPL) options and consumer durables financing.
For Amazon, the expansion builds on its recent acquisition of Axio, a licensed nonbank lender. For Flipkart, it’s the next step in building out Flipkart Finance, a registered nonbank financial arm awaiting approval from the Reserve Bank of India (RBI). Their strategies converge around one shared insight: credit access is the new battleground in digital commerce.
Why Amazon and Flipkart Are Expanding Into Lending
India’s eCommerce market, projected to surpass $200 billion by 2027, has matured beyond product sales. Today, growth depends on embedding financial tools into the shopping experience giving both consumers and merchants easier access to credit.
The Opportunity
- Low Credit Penetration: Only about 20% of India’s adult population has access to formal credit.
- Rising Digital Adoption: Nearly 700 million internet users are active on digital marketplaces and mobile payment platforms.
- Small Business Potential: Over 63 million micro, small, and medium enterprises (MSMEs) drive nearly one-third of India’s GDP but remain underfunded by traditional banks.
“Credit growth in India has enormous headroom,” said Mahendra Nerurkar, Amazon’s vice president for payments in emerging markets. “We’re designing tailored lending propositions for merchants and small businesses outside of major cities.”
Amazon’s Strategy: Building a Digital Lending Ecosystem
Amazon’s acquisition of Axio, a digital lender specializing in BNPL and personal loans, marks a significant expansion of its financial ecosystem. The company’s plan is twofold:
| Amazon’s Focus Area | Details |
|---|---|
| Small Business Loans | Extend working capital and cash management solutions to sellers and small merchants on Amazon India’s platform. |
| Consumer Credit | Expand BNPL and personal loan offerings for retail shoppers through Axio’s existing credit network. |
| Embedded Finance | Integrate lending and payment tools into Amazon Pay and Seller Central for seamless access. |
Amazon’s goal is to build a closed-loop financial ecosystem, combining eCommerce data, payments, and credit history. By using merchant performance metrics such as sales volume, returns, and delivery reliability Amazon can offer data-driven lending decisions with lower default risk.
Flipkart’s Strategy: Targeting Consumers With BNPL and Installment Loans
Flipkart, which commands a major share of India’s eCommerce market, is taking a consumer-first approach through its newly registered lending arm, Flipkart Finance.
The company plans to introduce two key lending products once it receives regulatory clearance:
| Product Type | Key Features | Target Users |
|---|---|---|
| No-Cost Installment Loans | 3- to 24-month EMIs at zero interest for online shoppers | Retail buyers purchasing on Flipkart |
| Consumer Durable Loans | Interest-bearing loans at 18%–26% per year | Shoppers buying electronics, appliances, or large-ticket goods |
Flipkart Finance’s entry into lending aims to make shopping more affordable and keep customers loyal within its ecosystem. By providing instant credit approval at checkout, the company can increase average order values and customer retention.
India’s BNPL Boom and Responsible Credit Use
Buy now, pay later (BNPL) continues to be a defining force in India’s digital finance market. Despite global regulatory scrutiny, Indian consumers have adopted the model with discipline.
Recent industry data shows that 97% to 98% of BNPL users in India pay their installments on time, using the option strategically rather than impulsively. Consumers cite flexibility, control, and low perceived debt as their top reasons for choosing BNPL.
| Top Reasons Indians Use BNPL (2025) | Share of Respondents |
|---|---|
| Scheduling flexibility | 23.4% |
| Feels different from traditional debt | 24.1% |
| Better control over payments | 23.3% |
“In an inflationary year, installment options are providing financial breathing room,” said one payments industry analyst. “They help families manage cash flow without increasing credit card exposure.”
How Digital Lending Is Reshaping India’s eCommerce
The lending expansion by Amazon and Flipkart signals a structural transformation in India’s digital economy where eCommerce, fintech, and banking are converging.
Key Shifts Underway
- From Transaction to Relationship: Retailers are becoming financial partners, extending credit and managing risk.
- From Credit Cards to Embedded Credit: BNPL and instant loans are replacing traditional cards for younger, mobile-first users.
- From Urban to Rural Markets: Lenders are targeting semi-urban and rural merchants, unlocking previously untapped regions.
The competitive advantage increasingly lies in owning both the checkout and the credit channel.
“By embedding lending into shopping journeys, retailers gain visibility into spending patterns, repayment behavior, and loyalty,” said Nandan Sheth, CEO of installment platform Splitit. “It’s a new form of data-driven relationship banking.”
Challenges: Regulation, Risk, and Market Saturation
While the lending race is heating up, both companies face significant challenges:
- Regulatory Oversight: The Reserve Bank of India (RBI) is tightening rules on BNPL and digital lending, requiring stricter underwriting and clearer disclosure of interest rates and fees.
- Credit Risk Management: As lending expands to first-time borrowers and small businesses, risk modeling and fraud prevention become critical.
- Competition: Local fintechs like Paytm, LazyPay, and KreditBee already dominate India’s digital credit space, intensifying pressure on margins.
- Data Privacy Concerns: The rise of embedded finance also raises questions about how retailers use transaction and behavioral data for lending decisions.
Why the Timing Matters?
The timing of these moves aligns with India’s post-pandemic recovery and the government’s push toward a cashless economy. With digital transactions growing rapidly and small enterprises going online, the demand for quick, affordable credit has never been higher.
Experts view Amazon’s and Flipkart’s entry as both a financial and strategic maneuver not just to increase sales but to own the infrastructure of consumer credit.
“Control over lending is control over loyalty,” said Anita Rao, a financial technology consultant based in Bengaluru. “Whoever finances the purchase also finances the relationship.”
Conclusion: Retail’s Next Frontier Is Finance
Amazon and Flipkart’s parallel expansion into lending marks a new chapter in India’s eCommerce evolution. What began as a battle over discounts and delivery speeds is now shifting toward financial empowerment and embedded credit ecosystems.
For Amazon, lending strengthens its merchant network. For Flipkart, it deepens consumer loyalty through affordability. Together, their strategies show that the future of retail lies not just in what you sell but how you help customers pay for it.
As India’s small businesses and digital shoppers gain access to new financial tools, the country’s retail economy may become not only bigger but also more financially inclusive.
FAQs
What is Amazon planning to do in India’s lending market?
Amazon plans to expand small business and merchant loans through its subsidiary Axio, offering credit and cash flow tools to sellers on its platform.
What products will Flipkart Finance offer?
Flipkart Finance plans to launch buy now, pay later (BNPL) products and consumer durable loans, offering zero-cost EMIs and installment plans for online shoppers.
How will these moves impact Indian consumers?
Consumers will gain easier access to short-term credit and flexible payment options, particularly in tier-2 and tier-3 cities where traditional credit penetration is low.
Are there risks for borrowers?
Yes. While BNPL products offer convenience, consumers must track payment schedules to avoid late fees or credit score impacts.
How does RBI regulation affect these programs?
The RBI closely monitors nonbank lenders and digital credit providers to ensure transparency and consumer protection. Both Amazon and Flipkart must comply with lending and data-use regulations before expanding fully.