What if an e-commerce giant could not only sell you goods but also directly finance every purchase, from a new smartphone to a small business loan? This is the strategic play Amazon is executing in India with its recent, long-anticipated acquisition of Axio, formerly Capital Float. Valued at an estimated $200 million (INR 1,762 crore) in an all-cash deal, this move solidifies Amazon’s deep commitment to India’s rapidly expanding digital financial services landscape, fundamentally reshaping the competitive credit ecosystem.
The transaction, following regulatory approval from the Reserve Bank of India (RBI), is more than a simple expansion; it’s a calculated vertical integration. Amazon, already a prior investor with a 17.38% stake through its Sambhav Venture Fund since 2018 (including an additional $20 million in August 2024), now fully owns a critical piece of India’s fintech infrastructure.
Investor Pulse
- Market Sentiment: Cautiously Optimistic
- Key Catalyst: Direct NBFC License Acquisition & Vertical Integration
- Time Horizon: 12-24 months for significant impact
This acquisition grants Amazon direct access to a Non-Banking Financial Company (NBFC) license via Axio’s subsidiary, CapFloat Financial Services. This pivotal regulatory asset empowers Amazon to originate loans independently, sidestepping reliance on third-party lenders and streamlining its financial operations under the burgeoning Amazon Pay umbrella. It’s a direct response to India’s immense, untapped credit potential, where currently only about one in six customers can access checkout financing.
Mahendra Nerurkar, Vice President, Payments at Amazon India, articulated the strategic imperative, emphasizing that expanding credit access remains a fundamental priority. Axio’s proven digital lending expertise, combined with Amazon’s unparalleled reach and technological infrastructure, is poised to significantly broaden “responsible lending to millions more customers and small businesses.” Axio co-founders, Sashank Rishyasringa and Gaurav Hinduja, echoed this, stating the union will accelerate their mission to “take digital lending to the next 100 million Indians – responsibly and at scale.”
This is a textbook example of “platform verticalisation,” designed to yield higher margins, enhance customer economics, and leverage richer first-party data for superior credit underwriting by owning the entire lending stack. The ambition extends well beyond Buy Now, Pay Later (BNPL) to encompass personal loans, small business credit, and potentially future forays into wealth management.
The financial performance of Axio further underpins this aggressive posture. Having served over 10 million customers, Axio reported Assets Under Management (AUM) of Rs 2,200 crore (approximately $251 million) in FY24, a slight decline from Rs 2,427 crore in March 2024. Despite this, revenues surged by 50% to Rs 351 crore, and losses significantly narrowed to Rs 18 crore from Rs 137 crore in the previous fiscal year, all while maintaining a gross Non-Performing Asset (NPA) base of 1.8% as of March 2024.
India’s digital lending market, projected to reach $2.37 billion by 2030 at a robust CAGR of 30.2%, presents a compelling narrative for this acquisition. The BNPL segment alone is forecast to escalate from $12.13 billion in 2025 to $29.33 billion by 2034. This growth trajectory, juxtaposed against India’s less than 10% adult credit card penetration and surging UPI adoption, highlights a fertile ground for digital credit innovators.
Amazon’s direct entry with an NBFC license immediately reshapes the competitive landscape. This move positions Amazon in direct contention with rivals such as Flipkart, which itself secured an NBFC license in June 2025 to offer direct lending services. Other established players in the BNPL space, including ZestMoney, Simpl, and LazyPay, will now face intensified competition from a deeply capitalized and technologically advanced entrant. This heightened competition could lead to margin compression for smaller, less diversified fintech lenders.
While the “bullish” case points to accelerated growth, deeper financial inclusion, and Amazon’s potential to evolve into a comprehensive “one-stop financial hub” in India, the “bearish” perspective warrants careful consideration. The regulatory environment is evolving rapidly; while RBI approval signals a maturation of big tech’s regulatory playbooks, the digital lending sector in India has been subject to increasing scrutiny. The RBI has implemented strict guidelines, including restrictions on the First Loss Default Guarantee (FLDG) model, mandating robust operational frameworks and consumer protection. Amazon will be required to strictly adhere to these regulations, maintaining transparency and responsible lending practices as it scales. For a detailed reference on this evolving landscape, investors can review the comprehensive guidelines issued by the RBI to safeguard borrowers and enhance transparency in the digital lending ecosystem.
Axio’s past, which included valuation erosion partly due to loan defaults in its edtech portfolio, serves as a stark reminder of the inherent risks in the lending business. Amazon will need to ensure Axio’s continued focus on robust risk management, especially as it endeavors to responsibly scale credit access to millions more. The ongoing operation of Axio under its current leadership team as a wholly-owned subsidiary, maintaining an arm’s-length relationship while integrating deeply with Amazon Pay’s credit products, suggests a measured approach to integration and risk management.
For institutional investors, this acquisition represents a significant catalyst for Amazon’s growth trajectory in an emerging market, albeit one that comes with heightened competitive pressures and the vigilant eye of regulators. The implications are clear: Amazon is not merely participating in India’s digital economy; it is actively shaping its future, embedding finance deeply into the consumer experience, and demanding a keen watch on both innovation and governance.
