Amazon.com Inc. has completed the acquisition of Bengaluru-based checkout financing startup Axio after securing approval from the Reserve Bank of India (RBI), marking one of the largest deals for Amazon's India operations.
The acquisition will see the buy-now-pay-later startup continue expanding partnerships with other brands for checkout financing, Mahendra Nerurkar vice president for Payments at Amazon, told Moneycontrol.
"It opens up opportunities for us to co-create new products to serve credit needs of customers beyond checkout financing apart from serving small and medium businesses," Nerurkar said.
The checkout financing product called Amazon Pay Later is available as a checkout option on third-party apps such as Zomato, Swiggy, Zepto, Bigbasket, Apollo 24*7 and several other consumer platforms.
While Amazon and Axio did not confirm the deal size, sources said the acquisition happened at a value of $200 million.
Amazon participated in the series C round of $22 million in the Bengaluru-based Axio (earlier known as Capital Float) in 2018. A year later, Axio launched its BNPL product, the Amazon Pay Later, for the ecommerce company.
The deal includes retention provisions requiring founders and key management to remain with the merged entity for at least three years, sources said. The deal talks began late last year and concluded now, as it needed regulatory approval since Axio is an NBFC regulated by the RBI. DC advisory advised Axio and its investors on the transaction.
Role of Axio within Amazon
Axio has around 10 million customers and has Rs 2,200 crore as assets under management. The company said that it has not and will not follow an aggressive growth strategy to avoid customers falling into a debt trap.
“Lending must be measured, and we very clearly stick to a low-end growth strategy. We were highly conscious about customers' ability to pay and managing their exposure at the right levels. So that has been a cornerstone of how we have built this business and built this partnership together,” Gaurav Hinduja, cofounder of Axio, told Moneycontrol.
Amazon customers have a plethora of payment options from Amazon Pay Balance (in-house pre-paid wallet), Amazon Pay UPI, Amazon Pay ICICI Credit Card apart from all the other card and UPI options among others.
To be sure, the Amazon Pay ICICI credit card is one of the most popular credit cards in the country, having issued more than 50 lakhs cards in around six years.
Nerurkar said that even as the credit cards in the country exploded, the ecommerce firm continued to see a good demand for the BNPL product.
“Even as credit cards have grown, pay later has not scaled back. Even without rewards, it continues to grow in terms of the number of customers registering, actively using, and maintaining a healthy repayment behaviour on it,” he said.
According to Nerurkar, there is still a large unmet need of customers and individual merchants for such a product.
“I see the checkout financing as a product plays a key role is in terms of for some of these underserved customers, creating a very peaceful, low-income product with end-use control through our digital interface,” he added.
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