Amazon will acquire Axio, an Indian BNPL company founded earlier this year, for more than $150 million. This shift shows Amazon's growing interest in financial services for consumers based in India, the firm's rapidly expanding market.
Morgan completed the acquisition in December after conducting thorough investigations, which have been confirmed by Axio in one of their blogs. However, the transaction may only take place with the approval of the Indian central bank.
In Axio's case, Amazon has participated in its operations for six years which shows that the two have had a long-standing partnership since Axio is based in Bengaluru. Currently, Axio has received $135 million from leading firms, including Peak XV Partners, Ribbit Capital, and Elevation Capital.
Point of sale financing company Axio was earlier known as Capital Float. It serves its customers through its apps available on platforms like Amazon and MakeMyTrip, for demography that is unserved by conventional banks.
The financial scenario in India implies poor credit card usage and the absence of cheap small-deal credit products. Mainstream financial institutions particularly shun such credits because their returns on such facilities are typically meager.
Axio solves these problems by using its regulated approach towards lending and offering customers a platform for fast credit assessment. The company states that working with its system, credit decision-making takes two clicks and five seconds.
Indian BNPL industry is fully competitive now, however, there are leaders in the marketplace including Bajaj Finance. It becomes very hard for startups like Axio to crack the competition due to already-rooted players such as Bajaj Finance.
Furthermore, other BNPL startups have faced a lot of challenges in the growth of their business. Shut down recently due to inability to navigate the regulatory environment, ZestMoney gave similar services and was earlier worth $ 450 million in funding by Goldman Sachs. Sadly it couldn't sustain the growth and was sold to DMI Group in a fire sale.
The BNPL space is still relatively new and startups in the space continue to face ongoing challenges such as regulatory compliance, customer acquisition costs, and making it profitable. Yet despite these challenges, Axio's model is innovative enough, and Amazon is behind enough, to give it the necessary resources to establish itself in the market.
Amazon's second major purchase in India this year is the acquisition of Axio. The company also purchased MX Player, a popular video streaming platform, in June. These are investments in Amazon's bigger plan to spread its services and footprint in India.
By integrating Axio into its ecosystem, Amazon aims to enhance its financial services capabilities. This acquisition could enable Amazon to offer more flexible payment solutions, aligning with its strategy to make e-commerce more accessible and inclusive for Indian consumers.