Amazon Pay Sees Big Opportunities in India’s Small Towns, Offline Payments
Contents
Amazon Pay digital payments in India
Amazon Pay Sees Big Opportunities in India’s Small Towns, Offline Payments
Amazon Pay India, the digital payments arm of e-commerce giant Amazon India, is strategically focusing on deeper penetration into offline payments at physical stores this fiscal year. The company aims to introduce new payment methods and enhance safety and security measures to control and lower fraud incidents.
Key Highlights:
- Expansion into Offline Payments:
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- Amazon Pay is set to offer a variety of payment options including Unified Payments Interface (UPI), credit cards, and wallets, instead of specializing in a single segment.
- “We see opportunities in penetrating more deeply into offline (physical stores), exploring different new ways of payment methods, and continuing to invest in safety and security to control and lower frauds. We continue to invest in UPI,” said Bansal at the launch of the report titled “How Urban India Pays,” in collaboration with consulting firm Kearney.
- Collaborations and Innovations:
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- Following Amazon Pay’s successful collaboration with ICICI Bank Ltd for credit cards, the payment aggregator is exploring more partnerships with banks for credit cards and opportunities with the government’s Open Network For Digital Commerce (ONDC).
- With over 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. Additionally, Amazon Pay has introduced voice-based UPI payments through Alexa-enabled devices.
- Amazon Pay has secured a prepaid payment instrument license and a payment aggregator license from the Reserve Bank of India, strengthening both its consumer and merchant payments business.
Market Share and Competitors:
- Despite Amazon’s proactive measures, its market share in the retail payments segment in India remains significantly lower than that of Google Pay, PhonePe, and Paytm, which together control about 90% of the market.
Opportunities in Small Towns:
- Bansal highlighted the growing adoption of digital payments in smaller towns. According to the Amazon Pay-Kearney report, 65% of transactions in tier two and three cities are digital, compared to 75% in larger cities.
- “It is a positive surprise that earlier there used to be a significant gap between small towns and large metros like Mumbai. Now that gap is only 10%, which is a significant decline,” Bansal said, noting the rapid adoption of digital payments in smaller towns. Amazon Pay digital payments in India
- This growth presents an opportunity to expand credit in small towns, where the usage of credit is currently less than in metros.
Consumer Preferences and Future Growth:
- The report revealed that the growth in digital payments in India is primarily led by online channels such as e-commerce platforms, with only 10% of consumers preferring cash payments compared to 52% of transactions in offline channels. Amazon Pay digital payments in India
- Other payment modes such as 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 stated.
- 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. Amazon Pay digital payments in India
By capitalizing on these opportunities, Amazon Pay aims to strengthen its presence in India’s burgeoning digital payments market, particularly in smaller towns and offline payments.
Conclusion:
Amazon Pay is poised to capitalize on the significant opportunities within India’s evolving digital payments landscape. By expanding its reach into smaller towns and offline payments, enhancing payment options, and ensuring robust security measures, Amazon Pay is well-positioned to gain market share and foster greater financial inclusion. As the digital payments sector continues to grow, especially in lower-income and smaller town segments, Amazon Pay’s strategic initiatives and collaborations will be crucial in driving its success and maintaining its competitive edge.
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