Amazon Pay to diversify digital payment ops, focus on small towns

Amazon Pay has taken various initiatives to win over consumer’s confidence, which includes receiving prepaid payment instrument licence and a payment aggregator licence from Reserve Bank of India

Amazon Pay

New Delhi: Amazon Pay India, the digital payments arm of e-commerce giant Amazon India, is set to diversify its business operations and planning to try offline system of payments this fiscal. The new payment system will come with enhanced safety and security features, said Amazon Pay’s chief executive Vikas Bansal.

The diversification of business operations envisages launching of a variety of payment options including unified payments interface (UPI), credit cards and wallets. “We see opportunities in penetrating more deeply into offline (physical stores), different new ways of payment methods, and continue to invest in safety and security for controlling and lowering frauds,” said Bansal, adding that the Amazon Pay will continue investing on UPI.

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The Amazon Pay has already tied up with ICICI Bank Ltd to launch credit card facility as the payment aggregator. It is also exploring partnership opportunities with other banks for credit cardsand the government’s Open Network For Digital Commerce (ONDC).

Amazon Pay has more than 4.20 million users, of which about 28% are those, who are availing Amazon Pay-ICICI Bank credit card till June 30. It has also introduced voice-based UPI payments through Alexa-enabled devices.

Amazon Pay has taken various initiatives to win over consumer’s confidence, which includes receiving a prepaid payment instrument licence and a payment aggregator licence from the Reserve Bank of India. However, Amazon’s market share in the retail payments segment in India is much lower than that of Google Pay, PhonePe and Paytm, which together control about 90% of the market.

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Amazon Pay eyes tier-2-3 cities

The digital payment arm of Amazon India is looking to cash in the opportunities in smaller towns, which are fast adopting the digital payments system. The Amazon Pay-Kearney report said that 65% of the transactions done by consumers in consumers in tier two and three cities were digital, and 75% in larger cities. The report is based on a survey of samples from 120 Indian cities.

Bansal said that the gap in volume of digital payment in metros and small towns is narrowing down fast. “Earlier there were a lot of gap between small towns and large metros like Mumbai with regard to digital payment operation. Now that gap is only 10%, which is a significant decline,” Bansal added. He further see the opportunities in promoting credit card facilities in smaller towns, where usage of credit is quite low.

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“The growth in digital payments in India is currently led by online channels such as e-commerce platforms, with only 10% of consumers prefer paying through cash as compared with offline channels such as buying from merchants, where 52% of transactions are made in cash,” the report said. It also underlined that other payment modes such as through wearables, voice-activated assistants and ‘buy now, pay later’ (BNPL) plans are gaining popularity among consumers.

The report further adds that BNPL is a credit-based payment option, particularly for transactions under ₹5,000. It is a popular payment method, with around 87% of respondents being aware of it. However, its usage is moderate, with only about 34% of respondents using it.

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