India’s payments sector, valued at $357.5 billion, has presented challenges for U.S. tech giants like Facebook, WhatsApp, and Amazon. While Google has managed to establish a strong presence in the market, the others have struggled to gain significant market share despite their strengths in social media, messaging, and e-commerce. With Amazon now showing renewed interest in India’s payments market, the company is making efforts to secure necessary licenses and strategic partnerships to potentially build a robust payments ecosystem in the country.
Despite Amazon’s aggressive efforts to increase its market share in India’s retail payments segment, its Amazon Pay service lags behind competitors like Google Pay, PhonePe, and Paytm, which collectively control about 90% of the market. However, Amazon’s strengths in e-commerce offer opportunities in the merchant payments segment. In February, Amazon Pay obtained a payments aggregator license from the Reserve Bank of India, allowing it to process e-commerce payments for app sellers and direct-to-consumer sellers. With Amazon holding a significant share of India’s e-commerce market, there is potential for growth in the merchant payments sector.
While Amazon has focused on standard e-wallet features and buy now, pay later services in the retail payments space, the company is now exploring credit card offerings. Amazon recently launched a co-branded credit card with ICICI Bank and is looking into a collaboration with the National Payments Corporation of India. India’s credit card penetration is low but has seen significant growth, and integration with UPI payments rails could drive further adoption. Integrating credit cards with UPI has the potential to increase credit card acceptance in India significantly, according to fintech estimates.
In a highly competitive market like India’s payments sector, Amazon’s new initiatives will require time to gain traction. Subsidies may be necessary to drive adoption of Amazon credit cards, while merchant subsidies could aid in attracting more sellers to the platform. While the dominance of Google Pay and PhonePe in UPI retail payments could pose challenges, regulatory efforts to address their market dominance may benefit India’s fintech startups rather than other tech giants like Amazon. Despite challenges, Amazon’s long-term strategy in India’s payments market reflects its commitment to exploring opportunities in various segments and building a strong presence in the country’s evolving digital payment landscape.
