Amazon gets RBI approval to launch digital wallet in India
Amazon India has received Reserve Bank of India’s 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 Amazon Pay Balance works in a similar manner to other mobile wallet services, it was restricted to transactions only on Amazon.
Amazon confirmed the development, but did not comment on the broader scope of what Amazon’s wallet service could look like and whether it would cover areas such as bill payments.
“We are pleased to receive our PPI license from the RBI. Our focus is providing customers a convenient and trusted cashless payments experience. RBI is on the process of finalizing the guidelines for PPIs. We look forward to seeing a continuation of the low limit wallet dispensation with simplified KYC & 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 makes 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 startup PhonePe Internet Pvt Ltd, which is owned Flipkart (Amazon’s biggest rival in India), launched an app based on the Unified Payment 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 license in late-March. The development comes weeks after the RBI issued guidelines on issuance and operation of PPI licences, indicating potentially stricter norms for mobile wallet players as the central bank looks to ramp up focus on security and customer protection.
“We hope the government and RBI would continue to encourage multiple ways to shift consumers from cash behaviour by recognising the value of digital wallets, used especially for making small value payments to large merchants like ecommerce, government, IRCTC, utility or insurance companies,” said Amazon’s Jagannathan.