Payments space major Amazon Pay will double down on the use cases of Unified Payments Interface and and will soon introduce an option to link RuPay credit cards to Amazon Pay UPI, Whole-Time Director Vikas Bansal said. In a conversation with Piyush Shukla and Siddhant Mishra, Bansal says there is a lot of scope for buy now-pay later (BNPL) model for “serious” players in the space. Edited excerpts:
Can you elaborate on banking partnerships for pay later product?
Today we have a large portfolio of instalments for merchants. If the customer wants to use instalments, we provide all credit in the ecosystem for them to use. What makes this interesting is customers can pay zero interest instalments. That works extremely well. Today almost two-thirds or more instalments or more are zero interest instalments. We work with almost every bank and non-bank in the country who offers instalments…we have more than 8 million users who are using that product. We also do some work on the B2B side. We have our Amazon business where customers can use the pay later product…and we also do work on seller side where an Amazon seller can get financing.
Is BNPL a sustainable product in long term, given the stringent regulatory norms?
Absolutely, because India is very under-penetrated on credit. Risk and compliance is the cost of doing business in the financial services sector. Serious players recognise that customer-friendly offerings may come with a high level of governance and cybersecurity norms. Banks and fintechs globally have shown business models can be sustainable even with high levels of compliance. There are enough revenue pools nowadays. BNPL facilitators and banks both stand to make money. Unlike UPI transactions, which were free, I don’t see many of the services being free from the get-go.
You enabled 57.60 million UPI transactions in July. Will the pace continue going ahead?
You can expect a lot more to come…UPI payments via RuPay credit cards is coming soon on Amazon Pay and we are very excited about credit on UPI, we already do wallet on UPI, so we are doubling down on UPI for sure.
Is there a possibility for Amazon Pay to enter formal non-banking financial companies space?
Compared to global markets, the Indian e-commerce segment is still evolving, so we have a huge opportunity. When it comes to Amazon, it is about solving large problems. When we started, almost 1 in 2 transactions used to fail and we had to a lot of innovation to get people to be able to pay or shop and pay. For example we started with PPI licence, then PPAP licence from NPCI, insurance agency licence, now we have got in principle approval for payment aggregator licence…if we feel like our existing licences do not cover for it (financial needs) then we go for it.
Much regulatory clarity on digital lending has come in the past few years. In which areas do you require more clarity?
All regulatory developments have been progressive in nature. That does not mean all has been done.
One big area that still needs more clarity is the alternate authentication mechanism. We can have lot more innovation and new mechanisms.