Amazon Pay India, the digital payments arm of e-commerce giant Amazon India, is focusing on penetrating deeper into offline payments this fiscal year, as it looks to introduce new payment methods and enhance safety and security, chief executive Vikas Bansal told Mint on Tuesday.
Amazon Pay will offer a variety of payment options including Unified Payments Interface (UPI), credit cards and wallets rather than specialise in a single segment, he added.
“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… We continue to invest on UPI,” Bansal said on the sidelines of the launch of a report titled How Urban India Pays, in collaboration with consulting firm Kearney.
Following Amazon Pay’s collaboration with ICICI Bank Ltd for credit cards, the payment aggregator is exploring more such partnerships with banks for credit cards as well as opportunities with the government’s Open Network For Digital Commerce (ONDC), Bansal said.
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With more than 4.2 million users, the Amazon Pay-ICICI Bank credit card accounts for about 28% of the private bank’s entire credit card user base as of 30 June. It has also introduced voice-based UPI payments through Alexa-enabled devices.
Amazon Pay has been taking several steps to strengthen both its consumer and merchant payments business, which includes receiving a prepaid payment instrument licence and a payment aggregator licence from the Reserve Bank of India.
That said, 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.
The smalltown opportunity
Bansal also highlighted the opportunity provided by the increasing adoption of digital payments in smaller towns. According to the Amazon Pay-Kearney report, 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.
“It is a positive surprise that earlier there used to be a lot of gap between small towns and large metros like Mumbai. Now that gap is only 10%, which is a significant decline,” Bansal said, underlining the adoption of digital payments has picked up pace in tier two and three cities.
With this growth, he sees an opportunity to expand credit in small towns. “The usage of credit is less in small towns than metros, and that is an opportunity,” he added.
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According to the report, 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 also revealed that other payment modes such as through wearables, voice-activated assistants and ‘buy now, pay later’ (BNPL) plans are gaining popularity among consumers.
“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,” the report said.
As per the report, the next wave of growth in digital payments will be driven by increasing digital penetration among consumers in lower income groups and smaller towns. New payment methods such as UPI Lite and UPI Lite X should be encouraged among these consumer segments, it added.