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Amazon Pay gets $20 mn from parent, rolls out third-party payment services

13 July, 2017

American online retail giant Amazon has infused $20 million (Rs 130 crore) in Amazon Pay, with the much talked about wallet services for third-party payments finally rolling out in India.

According to the latest filings with the Registrar of Companies, the American retail giant has invested in Amazon Pay India Pvt. Ltd through its Singapore-based subsidiary, Amazon Corporate Holdings Pvt. Ltd, and the parent, Amazon Inc.

While Amazon Pay received the latest tranche on June 28, another Rs 67 crore was invested by the parent company in March.

As part of its global partner programme, the retailer had been trying to set up a third-party payments solutions service, where e-commerce marketplaces as well as other online businesses could integrate with Amazon Pay as a mode of consumer payment option across partner websites.

In March, Amazon India had received the Prepaid Payment Instrument licence from the Reserve Bank of India to launch its own digital wallet.

The company has already tied up with the likes of Housejoy, Abhibus, Faasos, Behrouz, Jus Tickets, mydala.com, Box8, Innerchef, Byju’s, Amar Chitra Katha and jewelry brands Orra, Candere and Kothari, which have also started accepting payments through Amazon Pay. It is in talks with several other merchants to bring them on board.

This will pave the way for the online retail giant to gain a slice of India’s fast-growing digital payments business, dominated by Paytm and Freecharge.

However, it is not clear whether the company has immediate plans to extend the Amazon Pay services to offline commerce or integrate with the Unified Payments Interface platform.

E-mail queries to Amazon did not elicit any response till the filing of this news report.

However, a report by The Economic Times earlier this week had suggested that the company is all set to adopt UPI. Around the same time, VCCircle had reported that Amazon’s homegrown rival Flipkart had soft-launched its UPI-based payments platform, Phone Pe, as a consumer payment option at offline stores.

Last month, the company’s India head Amit Aggarwal had said that it was gearing up to launch the new digital payments service, which would be broader in scope than its Pay Balance service, and will not be limited to Amazon-only transactions.

Consumer adoption is key
Industry experts feel that the move is natural considering the depth of network that Amazon has, more so, as it has also received the nod from Department of Industrial Policy and Promotion to open brick-and-mortar food outlets. While its captive consumer base plays to its advantage, the success of Amazon Pay, however, hinges on its adoption as an underlying payment option by consumers.

“With a strong e-commerce engine to its credit, Amazon has to first build a critical mass of vendors and partners, which will then make it easier for consumers to move onto the Amazon Pay platform,” said Sanchit Vir Gogia, founder & CEO, Greyhound Research.

“However, how it uses the consumer data generated with its partners is a potential cause for concern. Hence, it will have to exercise some transparency on this front,” he added.

Capturing online consumers
With a rise in the digital economy following the recent macroeconomic changes, including the Digital India push, UPI and demonetisation, experts feel there is enough opportunity for Amazon to capture the next base of consumers – the middle and bottom of the consumer pyramid – who got digitally-empowered only recently. Mass penetration of Reliance Jio’s services also adds to its advantage.

According to Anup Jain, managing partner at consumer and retail consulting firm Redback Advisory, the move by Amazon provides it with another avenue to acquire new customers in the high-frequency-cum-low-ticket segment, who were not part of the first wave of digital payment adoption.

“E-commerce and retailing is at the heart of Amazon’s business model, while it is the other way round for businesses such as Paytm and Mobikwik, who have to reach out to retailers for adoption of their payments platforms. While this is certainly a way to offer a seamless payments platform for its consumers, it can also be seen as a protective strategy by Amazon in terms of a moat and retention of its customer data within its own platform,” Jain added.

However, he feels that it might not make sense for Amazon to roll its payment platform to offline commerce as it would not add an incremental value or complement its businesses.

Amazon’s rising focus on digital payments can also be gauged from recent developments at the firm. The authorised share capital of Amazon Pay India Pvt. Ltd was recently hiked from Rs 69 crore to Rs 400 crore, according to filings with the RoC. Besides, in February, it had bought Noida-based payment gateway firm Emvantage to mark its first acquisition in India.

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Amazon Pay gets $20 mn from parent, rolls out third-party payment services

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