Google Goes Beyond FinTech: Tier-II and Mid Cities as New Targets Will Gpay gold loan and Gemini in regional languages surpass PhonePe and Paytm dominance?
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Not just in metro cities, but Tier-II and smaller cities have embraced the Unified Payments Interface (UPI), contributing significantly to India's digital payments market. In 2022 alone, more than 74 billion transactions worth INR 125.94 lakh crore were processed, according to NPCI data. Western tech giants like PhonePe and Google Pay dominate the UPI payment ecosystem, with a combined market share of 86 per cent, as per BCG's banking sector roundup for FY24.
For Google Pay (GPay), India is its largest market, boasting approximately 67 million users out of its global 150 million user base, as per the Watcher.guru. This strong foothold in India positions it as a key market for expansion. Hence, Google announced additional fintech services at the tenth edition of the Google for India 2024 summit.
Targeting Gold
Google is now expanding its credit offerings in India, targeting small businesses and consumers in Tier-II and smaller cities with new partnerships, including Aditya Birla Finance Limited and Muthoot Finance, to offer gold-backed loans on Gpay. Now it's credit partnership portfolio includes five lenders: DMI Finance, ICICI Bank, Indifi Technologies, Aditya Birla Finance, and Muthoot Finance.
"People across India can now access this credit product with affordable interest rates and flexible usage options—delivering flexibility to borrowers and security to lenders," Google stated at the event.
Sharath Bulusu, Director of Product Management at Google, explained, "Indians have a long cultural relationship with gold that goes beyond investment, which is why over 11 per cent of the world's total gold is held by Indian households. This asset can be mobilized for economic activity, and that is the concept behind these loans."
Indian Gold Loan Market Size
Gold loans have long been a go-to financial solution for many Indian families, often portrayed in Bollywood movies. For middle- and lower-income households, gold is not just an investment but a financial safety net. Real estate and gold are among the largest investment markets, especially in Tier-II and smaller cities.
In 2023, the Indian Gold Loan Market was valued at USD 80.12 billion, and it is expected to grow at a CAGR of 6.8 per cent by 2029. The growth has been driven by the increasing demand for credit, affordable gold loan options, and government initiatives. As per ICRA, over 80 per cent of gold loans are issued to users in Tier-II and smaller cities. The organized gold loan market is expected to surpass INR 10 trillion by FY25 and could reach INR 15 trillion by March 2027.
AI Enhances Adoption Prospects
Google reported that 40 per cent of India's population uses voice-based searches through its AI model, Gemini. Building on this, it is expanding its text- and audio-based support agent for credit products in regional languages. "Google Pay's AI-powered support guide can now answer users' questions regarding repayment cycles, eligibility criteria, EMIs, and more, while providing links to detailed terms and conditions," according to a Google blog post.
In addition to Hindi and English, the service will now support Bengali, Kannada, Gujarati, Malayalam, Marathi, Urdu, Telugu, and Tamil. The goal is to reach a broader population in India and onboard more users onto its platform.
"We are committed to doing this responsibly, ensuring that risk is well-managed for both the user and the lender. Partnering with reputable financial institutions is essential to us. Additionally, this move promotes financial inclusion, allowing users without credit histories to access loans safely. For users with a credit history, they often receive better terms with a collateralized loan, as the risk to lenders is reduced," Bulusu added.
Google's biggest competitors in the market are PhonePe and Paytm, with 360 million and 300 million registered users, respectively. Recent regulatory hurdles affected Paytm's business, however, a significant portion of small businesses and consumers still prefer it in Tier-II and smaller cities.
