Fintech firm Slice Small Finance Bank has entered the micro, small and medium enterprises (MSME) and merchant lending and is offering fully digital loans, according to a source aware of the development.
With the company's entry into merchant payments and lending, Slice is competing directly with the likes of Paytm, PhonePe, Google Pay and BharatPe, among others.
The Bengaluru-based small finance bank has also launched the Slice Business app on the Google Play Store. It provides a digital current account, QR code, and UPI payment rewards to merchants for receiving customer money in their Slice current account, as well as a UPI soundbox, similar to what Paytm and PhonePe offer, as per the listing information on the Google Play Store.
Unlike most other business current accounts, Slice is offering instant settlement, whereas for most current accounts, it happens at the end of the day or next day. Slice can potentially do this because it is also a bank and not a payment aggregator, unlike many of its fintech competitors.
Slice did not respond to Moneycontrol queries on its expansion into merchant lending.
New fintech lender for merchants
In a possible bid to attract existing merchant customers of Paytm, PhonePe and BharatPe, the fintech firm is also offering rewards to merchants on payment acceptance and payment volumes. Slice is also offering a zero-balance current account to merchants.
“The broader vision is to build a full-fledged digital bank. Merchant lending is a logical extension of that roadmap,” the source said.
Unlike Paytm or PhonePe, Slice is likely to lend mostly from its own book. The fintech holds an advantage over its competitors as Slice is a bank that can take deposits from the public, and hence the cost of funds is lower for the company, and it can offer competitive interest rates.
Slice is offering up to Rs 5 lakh instant digital loan with no collateral and a repayment option of up to 24 months.
The slight edge
The bank pays around 8 percent interest to depositors, whereas its lending interest rate could range anywhere from 14 percent to 36 percent, depending on the credit risk.
Meanwhile, PhonePe and Paytm are acting as platforms that connect lenders with merchant borrowers and charge a commission from lenders.
According to the source, Slice is pitching itself as a bank that works with the speed of a fintech for merchants and MSMEs.
“Slice is a bank, but offers the speed that people associate with fintechs. By providing credit directly rather than through intermediaries, it is positioned to deliver better outcomes, including lower costs for merchants and faster access to working capital,” the person added.
During its initial days, Slice specialised in assessing the credit risk for young consumers without any credit history. It started giving out small-ticket loans of Rs 5,000-Rs 10,000 and gradually increased the credit limit of its consumers.
Turns a corner
Over the past year, Slice has been expanding its consumer division as well by rolling out digital savings accounts, UPI-enabled branches, UPI-linked credit cards, and credit on UPI.
During the first half of the current fiscal, Slice turned profitable, reporting Rs 7 crore net profit. It reported total income of Rs 632 crore during the first half of FY 26, compared with Rs 604 crore in the full financial year FY 25, indicating a 100 percent growth in income, according to data from credit rating agency Crisil.
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