To launch digital wallet
Amazon India has received the Reserve Bank of India’s (RBI) approval to launch its own digital wallet in India, paving the way for the American online retail giant to gain a slice of India’s fast-growing digital payments business.
Amazon India, which had applied for what is called a Prepaid Payment Instrument (PPI) licence nearly a year ago, will now look to take on established rivals such as Paytm and Freecharge as it prepares to launch a prepaid wallet service that will be broader in scope than its Pay Balance service and will not be restricted to Amazon-based transactions.
In December, Amazon had launched its Pay Balance service in order to boost cashless transactions. While Pay Balance works in a similar manner to other mobile wallet services, it was restricted to transactions on Amazon.
Amazon confirmed the development, but did not comment on the broader scope of what its wallet service could look like and whether it would cover areas such as bill payments.
“We are pleased to receive our PPI licence from the RBI. Our focus is providing customers a convenient and trusted cashless payments experience. RBI is in the process of finalising the guidelines for PPIS. We look forward to seeing a continuation of the low-limit wallet dispensation with simplified KYC (know-yourcustomer) norms and authentication. This will allow us to help customers adopt digital payments at scale and thereby contribute towards making India a less-cash economy,” said Sriram Jagannathan, vice-president of payments at Amazon India.
Amazon’s new wallet service will look to address a vital problem in the world of payments— like other wallet services such as Paytm, it will help customers bypass the two-step authentication process for online payments using credit or debit cards and make the process smoother for online shoppers, thus plugging a key gap in the payments process that reduces the risk of loss of business from online shoppers.
In September, mobile payments start-up Phonepe Internet Pvt Ltd, which is owned by Flipkart (Amazon’s biggest rival in India), launched an app based on the Unified Payments Interface (UPI) platform, which was a key bet for Flipkart, given how payments are still largely an unsolved problem in both online and offline commerce.
Amazon received the PPI licence in late-march. The devel opment comes weeks after the RBI issued guidelines on issu ance and operation of PPI licen ces, indicating potentially stricter norms for mobile wallet players as the central bank looks to ramp up focus on security and customer protection.
RBI raised the minimum capi tal requirement for digital wallet operators by nearly five times and introduced a directive for ful compliance with KYC norms among other new guidelines causing an outcry among top digi tal payments firms.
Following the norms, top lead ers from the payments industry met RBI officials to discuss some of the clauses, including the KYC mandate, which they argued would act as a deterrent towards expanding digital payments.