Amazon Pay’s recent entry into fixed deposits comes at a time when digital FD volumes are slowing sharply, raising questions about whether the product can gain traction on consumer apps the way mutual funds, stocks or loans have over the past few years.
The payments platform recently launched fixed deposits on its app, joining a small group of consumer-facing platforms that have attempted to distribute FDs digitally. The move follows a similar effort by Google Pay, which exited the segment in 2021 after failing to see meaningful traction. So far, sustained adoption of online FDs has been limited to niche fixed-income platforms such as Stable Money, Wint Wealth and Grip Invest.
Industry executives told FE that the challenge is not distribution reach but user intent. While consumers visit dedicated investment platforms with the intention of parking money, UPI-led apps are still largely seen as transactional tools. “If an app is focusing on investment solutions, then the consumer also comes there with the mindset of putting money to work. But if the app is positioned as UPI-first, investment becomes secondary,” said Sagar Agarvwal, founder & managing partner, Beams Fintech Fund.
Intent Gap
The numbers reflect this constraint. All online FD marketplaces together are estimated to sell deposits worth about Rs 10,000 crore annually, or roughly 0.5% of incremental deposits in the system, according to industry estimates. These platforms typically distribute FDs from small finance banks and deposit-taking NBFCs, which offer interest rates of up to 8%, higher than most large banks. Minimum ticket sizes are also low, often starting at Rs 1,000, and do not require users to open a savings account.
Even so, the broader environment has turned less favourable over the past year. After strong growth in 2024, driven by peak interest rates, FD flows across most digital platforms have fallen 20-40% on-year, according to industry players.
“FD volumes were high earlier when rates were elevated. Now, with banks offering lower rates, flows have shrunk significantly,” one executive said, adding that volumes are likely to revive only once the rate cycle turns again.
The slowdown has forced some platforms to reconsider the product altogether. “We hear volumes have come down across platforms, and some players are completely shutting FD offerings due to low traction,” another executive said.
Onboarding Hurdles
Friction in on-boarding has also hurt conversion, with fresh KYC requirements for each deposit leading to drop-offs. The relatively modest yield premium of 50-100 basis points over traditional bank FDs has also failed to persuade many users to switch.