UPI Fintechs Bet Big on Co-Branded Cards to Drive Credit Revenue

Fintechs Shift Strategy as UPI Monetization Hits a Wall

As UPI transactions remain free, leading Indian fintechs are betting on co-branded cards to unlock new credit-driven revenues.
This strategic pivot is most visible in fintech platforms like Google Pay and PhonePe, which are expanding into co-branded credit card offerings.
Both players have tapped banking partnerships to offer credit products, using their massive user bases as a launchpad for deeper financial engagement.
The shift comes as fintechs face pressure to find monetizable use cases in a fast-evolving, regulation-bound payments ecosystem.
With over 6.5 billion UPI transactions processed monthly, Google Pay ranks second in India’s payment landscape, trailing just behind PhonePe.

Google Pay Moves Deeper into Credit Through Axis Bank Partnership

According to two insiders, Google Pay is developing a co-branded credit card with private lender Axis Bank for Indian customers.
This comes on the heels of earlier product rollouts, including personal loans and gold loans integrated directly within the app.
For example, Google Pay offers personal loans ranging from ₹30,000 to ₹10 lakh with flexible tenures between six months and six years.
In the case of gold loans, Google Pay acts as a lead generator for Muthoot Finance, facilitating doorstep service appointments via the app.
With this card, Google Pay aims to unlock a steady stream of sourcing commissions from partner banks like Axis.

PhonePe and HDFC Already Launched a Card—Setting the Pace

PhonePe, India’s largest UPI-based payment app, has already launched a co-branded credit card in collaboration with HDFC Bank.
The card enables deeper credit engagement, while allowing PhonePe to monetize customer traffic that its free payments infrastructure cannot.
Industry insiders believe these fintechs can earn between ₹1,000 to ₹1,200 per sourced customer for every card activation.
By owning a loyal, high-frequency user base, these apps are well-placed to cross-sell financial products with high conversion potential.
Distribution, rather than underwriting, is the strategy for most UPI-based fintechs entering the credit business through co-branded cards.

Fintechs Monetize Engagement, Banks Handle the Risk

While fintechs like Google Pay and PhonePe attract credit-hungry users, banks handle customer assessment, risk underwriting, and disbursal decisions.
This reduces operational friction for fintechs and ensures compliance with lending norms set by regulatory authorities and credit bureaus.
According to one digital lender, UPI apps easily push volumes, but most applicants don’t meet eligibility criteria for loan disbursal.
Still, fintechs benefit from commissions and increase engagement even if a minority of users actually secure credit products.
This model ensures scalability without exposing fintech platforms to direct credit risk or regulatory burdens tied to NBFC operations.

Paytm’s Lending Success Adds More Fuel to Fintech Credit Play

Paytm has emerged as a benchmark in consumer lending among Indian fintechs, disbursing over ₹1,500 crore in loans each quarter.
Its success demonstrates that platform-led lending can scale effectively when paired with robust analytics and multi-product distribution models.
Other fintechs now see co-branded cards as a low-barrier, scalable path to enter the credit business and drive higher engagement.
Paytm also earns a commission of nearly 2% on personal loans and less than 0.3% on gold loan sourcing, insiders shared.
This encourages rivals to copy its playbook by bundling credit offerings into their payment ecosystems for similar monetization.

Lenders Apply Strong Filters to Avoid Unsecured Loan Defaults

Traditional lenders partnering with fintechs remain cautious when onboarding customers for unsecured loans or credit cards.
Many, like L&T Finance, rely heavily on customer credit histories and bureau reports to assess borrower reliability before sanctioning loans.
In their FY25 analyst call, L&T Finance stated they focus only on applicants with solid repayment histories and alternate data tracks.
The company avoids “new-to-credit” borrowers and instead leverages fintech partnerships to attract low-risk, high-yield customers.
This disciplined approach ensures co-branded credit expansion does not lead to spikes in non-performing assets for partner banks.

Big Tech Expands India Fintech Play Beyond Payments

While Google Pay remains focused on payments, it now seeks to expand into broader fintech services such as credit and wealth products.
Amazon, another global tech major, already runs a successful co-branded credit card with ICICI Bank in India, boasting 5+ million users.
Amazon is also planning to acquire Axio (formerly Capital Float) to secure an NBFC license and scale credit offerings further.
These moves signal that global tech players are keen to participate in India’s booming digital credit economy.
With UPI remaining unprofitable, fintech platforms must lean into credit and financial products to sustain business momentum and user stickiness.

Conclusion: Co-Branded Cards Are Here to Stay

As fintechs hunt for new revenue streams, co-branded cards present a compelling opportunity to monetize loyal, high-engagement users.
From Google Pay to PhonePe and Paytm, co-branded credit is fast becoming a central feature in every fintech’s product roadmap.
Banks, in turn, gain efficient distribution and access to tech-savvy customers who already engage with financial services on digital platforms.
With compliance-focused lenders and data-driven fintechs working in sync, this model offers a low-risk way to scale India’s credit economy.
Clearly, co-branded cards are no longer a side bet—they’re becoming core to the future of fintech-led financial inclusion.

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