Amazon gets digital wallet licence

To take on Flipkart, Paytm; try to retain customers in its ecosystem

Amazon India, one of the biggest online marketplaces in the country, is set to make its presence felt in the highly competitive digital payments space.

It has got a licence from the Reserve Bank of India (RBI) to launch an e-wallet. This will help Amazon take on rivals, Flipkart and Alibaba’s Paytm, as it tries to boost savings and retain customers in its ecosystem.

The retailer wants to let users shop on its platform, make offline payments, buy bus and railway tickets, and pay for utilities through its wallet. This will put the company squarely against Paytm and Flipkart-owned PhonePe, beside number two player FreeCharge.

These players are betting on the payments space to engage the growing base of online shoppers. Paytm’s parent, Alibaba, pioneered the use of digital wallets to dominate the e-commerce market in China.

PhonePe uses the Unified Payment Interface (UPI), the peer-to-peer payment technology platform that allows users with a mobile phone to transact digitally. Flipkart is looking to aggressively invest in PhonePe from the $1.4 billion it raised earlier this week from Tencent, Microsoft and eBay.

“Our focus is providing customers a convenient and trusted cashless payments experience. The RBI is in the process of finalising the guidelines for PPIs (prepaid payments instruments). We look forward to seeing a continuation of the low-limit wallet dispensation, with simplified KYC (Know Your Customer) rules and authentication,” said Sriram Jagannathan, vice-president, payments, Amazon India.

The company said this would allow it help customers adopt digital payments at scale. Amazon, till now, operated a closed mobile wallet Amazon Pay, which could be used only on its portal. However, now, like Paytm, MobiKwik and others, its wallet would be used in other places as well.

A digital wallet will also allow Amazon and its rivals to reduce costs that come with handling cash, the largest mode of transactions for ecommerce companies.

“We recently launched Amazon Pay, where customers can fund their pre-paid balance using internet banking and credit or debit card. With this, customers can go cashless and enjoy fast and easy checkouts, quicker refunds, coupled with a secured shopping experience. We will continue to look for ways to increase digital payments leveraging our PPI licence,” said Jagannathan.