Tez’s new avatar Google Pay enters digital lending, ties up with offline retailers

Google India has tied up with four private-sector banks to offer loans through its payments app and is also entering the offline retail segment, as the tech giant expands its financial services offerings in the country.

Google Pay, the rebranded version of Tez, has tied up with Federal Bank, ICICI Bank, HDFC Bank and Kotak Mahindra Bank to offer loans to users. Separately, the company is working with digital payments companies such as Pine Labs and BillDesk as well as banks to let consumers make payments at offline retail stores such as Future Group’s Big Bazaar hypermarkets and FBB fashion outlets.

“The loan process will be paperless and will be approved in an instant with the money transferred to your bank account directly,” Caesar Sengupta, vice president of Google's Next Billion Users initiative and payments, told reporters on Tuesday.

Google Pay will be the first major payments app in India to offer bank loans, although a host of digital lending startups have come up over the past few years. Google is hoping to gain an edge over not just these digital lending startups but also big internet companies such as Facebook Inc.’s WhatsApp.

While WhatsApp is facing hurdles in launching its payment service in India, another big player in this segment is homegrown company Paytm. The digital wallet and payments bank has the backing of Chinese billionaire Jack Ma’s Alibaba Group, Japan’s SoftBank Group Corp and has just got funding from American billionaire Warren Buffett’s Berkshire Hathaway. Amazon is also ramping up its payment service that it offers via Amazon Pay, as is Flipkart—now owned by Walmart Inc—via its PhonePe app.

Google had launched Tez in September last year. It initially offered payments via the Unified Payments Interface (UPI) and later started supporting utility and bill payments along with messages and emojis.

Sengupta said the app has been downloaded 55 million times and has an active monthly user base of 22 million. The app has so far helped carry out 750 million transactions with an annual run rate of $30 billion in terms of transaction value, he said.

Last year, Sengupta had said that Tez had acquired 12 million active users in just 10 weeks of its launch and had processed more than 140 million transactions. This means that the payments app has recorded more than five-fold growth in the number of transactions and over 80% growth in user base.

Paytm, which leads the digital wallet category by volume, had said at the end of 2017 that it had 280 million users. Sequoia Capital and Cisco Investments-backed Mobikwik claims it has 107 million active users and processes $3 billion worth of transactions a year.

Sengupta also said more than 1.2 million small and medium enterprises are using Google Pay for payments. Paytm claims a merchant base of 5 million while Mobikwik claims 3 million merchants use its payments app.

Sengupta added that the company is trying to create richer experience for merchants such as the ability to pay using Google Pay without leaving the merchant app and push tickets to the Google Pay app. The company is also carrying out a pilot project in Delhi and Bengaluru that involves helping merchants find customers through Google Maps and its Search products.

"We are trying out these new features with some of the popular saloons, kirana stores and restaurants in the two cities along with the option for them to test send notifications to their customer base," Sengupta said.