As Per Amazon Pay India Head, The Company Will Focus More On Local Innovations For Indian Customers
Amidst increasing competition from PhonePe, owned by rival Flipkart, ecommerce giant Amazon India is reportedly doubling down to bolster its digital payments business. As stated by the newly-appointed Amazon Pay India Head Mahendra Nerurkar, the company will continue to invest aggressively in its digital payments arm over the next several months.
The capital infusion, as per Nerurkar, will allow Amazon Pay to develop more local innovations for Indian customers.
Amazon India’s renewed focus on its digital payments arm comes at a time when the stringent KYC norms of the RBI has resulted in a discernible slowdown in the percentage of new users.
During a recent media interaction, Mahendra shed light on the impact that the RBI’s new KYC norms have had on Amazon Pay’s growth, stating, “We take customer trust very seriously and also take regulatory compliance very seriously. So, there’s no cutting corners around that. We are asking customers for their officially valid documents, so that they can keep loading balances and using it. What we are seeing is that the adoption from new customers is being affected because of this. ”
“One of their primary reasons for using stored-value instruments was that it was friction-free and easy to use. And a certain amount of friction has been introduced as a result of these regulations. I think we’ll need to be patient in terms of figuring out what the best regulations are. I don’t think we’ve found the right solution yet as an industry and we’re working very closely with the regulators to find that solution,” he added.
According to Nerurkar, however, despite the slowdown in the growth of new users, Amazon Pay India has witnessed a significant jump in the volume of transactions, since the rollout of demonetisation in November 2016.
At the time of demonetisation, around 40% of all transactions on Amazon India were digital. Fast forward to 2018 and Mahendra claims more than 60% of the transactions on the online marketplace are digital.
Attributing the growth to the company’s continued focus on innovation, he said, “I think all our initiatives, i.e. improvement in experience, affordability, creating solutions like cash at doorstep, finding new ways of driving digital engagement with customers, are adding to new digital customers. Cash transactions have come down from 60% to 40% in a year,” Nerurkar said.
Before Nerurkar assumed the role of Amazon Pay India Head, the company had hired former Citi banker Sriraman Jagannathan to head its payments business and spearhead the launch of the digital wallet in February 2016.
As per sources in the know, Jagannathan will continue to lead the Amazon Pay Board, focussing on long-term strategy and initiatives. Recently, former Flipkart senior executive Mayank Jain also joined the company and is currently heading its financial services arm.
Driving Growth In Digital Payments Through Continued Investments
The ecommerce giant began attempting to enter the Indian fintech space in December 2014, with an investment of about $10 Mn in Bengaluru-based gift card technology and retail startup, QwikCilver Solutions.QwikCliver powered the e-gift cards for transactions on the ecommerce marketplace. As of now, it has also merged e-gift cards into Amazon Pay.
In 2016, it announced the acquisition of Noida-based payment gateway EMVANTAGE Payments. The company applied for a semi-closed wallet license with the RBI in March 2016, which it received a year later.
Amazon launched Amazon Pay Balance in December 2016, a payment option similar to how mobile wallets work but limited to transactions within the platform.
In April 2017, the Indian arm of the ecommerce giant secured the licence from the Reserve Bank of India (RBI) to operate a prepaid payment instrument (PPI).
The latest development around three weeks after Amazon Pay raised $30 Mn (INR 195 Cr) from its parent entity. The capital infusion was from Singapore-based Amazon Corporate Holdings Pvt Ltd and the US-based parent Amazon.com, as per filings with the Registrar of Companies (RoC).
Prior to that, in October 2017, Amazon India reportedly pumped $40 Mn (INR 260 Cr) into Amazon Pay. The move, aimed at tackling competition from rivals Paytm and Flipkart-owned PhonePe, came only three months after the ecommerce behemoth invested $20 Mn in Amazon Pay India.
Before that, in May last year, the digital wallet platform received $10.45 Mn (INR 67 Cr). Overall the last few months, the company has been doubling down to bolster its digital payments business in India. To that end, Amazon increased the authorised capital of its payments arm from $61.5 Mn (INR 400 Cr) to $307.7 Mn (INR 2,000 Cr) last year.
As per an Amazon India spokesperson, Amazon Pay balance (stored value account/wallet) grew YoY by 409% in 2017. More so, the wallet now accounts for 48% of all digital transactions on the platform.
As a per a report by Google and Boston Consulting Group, the digital payments industry in India is projected to reach $500 Bn by 2020, contributing 15% to India’s GDP.
While the focus on innovation and the parent’s continued investment in its digital payments arms will help Amazon Pay grow significantly, whether the RBI’s full-KYC mandate for all prepaid payment instruments (PPIs) users will further affect its growth remains to be seen.
(The development was reported by Livemint)