Amazon readying for big play in Indian payments market with sizeable capital infusion

By: and |
October 7, 2020 7:29 AM

To this end both players, as also Walmart/Flipkart-owned PhonePe have, over the last couple of years, been working to build a presence at every storefront across the country.

Earlier this year, Amazon had invested about Rs 1,355 crore in the payments entity.Earlier this year, Amazon had invested about Rs 1,355 crore in the payments entity.

Amazon Inc appears to be readying for a big play in the Indian payments market with a chunky capital infusion. Citing regulatory filings, business signals platform paper.vc, in a note, said Amazon Pay (India) has increased its authorised share capital from $820 million to $2.2 billion. Earlier this year, Amazon had invested about Rs 1,355 crore in the payments entity.

The investment gains significance at a time when incumbents in the payments space are going all out to woo the small merchant and the environment is becoming increasingly competitive. Paytm has set itself a target of 25 million merchants for FY21, while Google Pay last year said it is targeting over 200 million offline merchants.

To this end both players, as also Walmart/Flipkart-owned PhonePe have, over the last couple of years, been working to build a presence at every storefront across the country.

For at least a year now, Reliance Industries has also been trying to make inroads into this segment of retailers. The Facebook investment in Jio Platforms is expected to accelerate the process. Very soon, WhatsApp QR codes could pop up next to those of the three existing players.

WhatsApp has about 400 million users in India and features prominently in the daily lives of most of them. This existing user base, coupled with the 60 million-odd merchant network on JioMart, could make Jio a significant player in the payments market, experts say.

In other words, the non-bank payment players have made the transition from peer-to-peer (P2P) payments to a large-scale peer-to-merchant (P2M) model. Amazon Pay, which offers customisable payment solutions and corporate gift card services, could be looking to consolidate its presence at small merchant outlets.

Earlier this year, Vivek Lohcheb, head – offline business development, PhonePe, had told FE that 97% of commerce is still offline and within that, 90% is unorganised. “So, payments players are looking not at kiranas, but at all unorganised stores because they constitute the mass of merchants. Whoever wins this market will win the payments space,” he had said.

According to a Nielsen estimate, India has roughly 12 million kiranas and close to a million wholesalers that make up the lifeline of the $650-billion retail industry. Going to small merchants also makes sense for payments players because it opens up doors for cross-sell of other products and services, credit being the foremost among them. The data that can be mined from transactions at these stores could also be valuable for these tech-driven companies.

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