Amazon finally received its prepaid instrument (PPI) or wallet licence from the Reserve Bank of India at the end of last month. The online marketplace can now offer one click-payment to its users for more than online shopping.
Sriram Jagannathan, VP Payments, Amazon India said, “We are pleased to receive our PPI license from the RBI. Our focus is providing customers a convenient and trusted cashless payments experience. RBI is on the process of finalising the guidelines for PPIs. We look forward to seeing a continuation of the low limit wallet dispensation with simplified KYC & authentication.”
In India, around 350 million people use mobile wallets. Their average transaction size through this mode range from Rs.50 to Rs.4,000. The RBI states that digital payments through mobile-based national payment system, Unified Payments Interface (UPI) shot up in March 2017. During the month, UPI-based transactions went up by 20%, that is Rs.2,000 crore, compared to January’s Rs.1660 crore transactions through the same means. Out of all these, Rs.1,800 crore worth transactions came through mobile wallets last month.
US-based online marketplace, Amazon, is looking to increase savings and keep customers loyal to its platform. With its mobile wallet, it can do just this all while competing on the same level as Flipkart and Paytm.
What does Amazon’s digital wallet offer?
Initially, with Amazon Pay, customers could only carry out transactions on the platform. Now, customers can use the digital wallet to:
- Shop on the Amazon.in platform
- Make offline payments
- Buy rail and bus tickets
- Pay for utilities
Amazon’s Jagannathan said, “We recently launched Amazon Pay where customers can fund their pre-paid balance using internet banking and credit or debit card for smooth purchases and payments. With this, customers can go cashless and enjoy fast and easy checkouts, quicker refunds coupled with a secured shopping experience only on Amazon.in. We will continue to look for ways to improve customer experience and increasing digital payments leveraging our PPI license.”
Reducing payment complications
According to Indian law, there must be a two-factor authentication system for online payments (card details and CVV in addition to a one-time password sent to users registered mobile phone numbers or bank payment gateways). This lengthy process is complex and causes errors plus delays. With the wallet system, the online payment experience is less cumbersome.
For digital wallets, users only need the two-factor authentication process to add money to their wallets. After this, purchases can be made without the need for further authentication like this.
Going Digital to reduce costs and retain customers
With its wide range of digital wallet features, Amazon can compete with mobile wallet experts Paytm, FreeCharge and online retail rival Flipkart’s wallet PhonePe. Paytm investor Alibaba used digital wallets to capture the Chinese ecommerce market. Flipkart, Paytm and Amazon are now trying to replicate this effect in India.
Flipkart received fresh funding from Microsoft, Tencent and eBay recently and the etailer plans to use the same to further develop its mobile wallet. PhonePe utilises the UPI, the peer to peer payment technology platform that allows users to transact via mobile phones.
With digital wallets ecommerce companies can cut costs involved in handling cash transactions, which happens to be the largest form of payment in Indian ecommerce till today.
Jagannathan mentioned that Amazon hopes that the government and RBI continues to support different means that will get customers to reduce dependence on cash. This will only happen once customers realize the convenience and safety associated with digital wallets for both large and small transactions.