US based leading marketplace Amazon is taking baby steps towards its own payment system. The company has applied to the RBI for a licence to operate a semi-closed mobile wallet. Everything going hitch-free, with the required permissions, Amazon is planning to begin operations of its wallet by mid-year.
The company has applied for the licence under Amazon Online Distribution Services (AODS), which comes under Amazon Asia Pacific Resources.
A company representative took a ‘neither confirm nor deny’ stand on the issue with the following words, “A trusted, easy, convenient and friction-free payment experience has always been one of Amazon’s key pillars, globally and in India. We are driven by customer demands and seek every opportunity to do what it takes so that our customers benefit. We cannot comment specifically on what we may or may not do.”
Keen on an own payment system
Amazon has been exploring possibilities of having its own payment system with its recent acquisitions. The company recently purchased Emvantage, a Noida based payment gateway.
The company has also hired Sriraman Jagannathan, former employee of Citibank, doubtlessly to help propel the mobile wallet plans in the right direction.
What is a mobile wallet and how does it work?
In simple terms, a mobile wallet is similar to a credit or debit card. It is a virtual payment, wherein a user deposits an amount of money in a wallet account and uses it to pay for products and services of companies that are registered with the wallet service provider.
There are basically three types of mobile wallets:
- Semi closed
A user can transact with other service providers who have an agreement with the company that owns a semi closed wallet (this is what Amazon has applied for). This feature is offered by Paytm and PayUMoney. Shopclues is also in the fray after reportedly recently acquiring Momoe.
A user can transact with the service provider, with registered merchants as well as draw money from ATMs in an open wallet. An open wallet can only be issued by banks.
Having a mobile wallet will doubtlessly strengthen a company. Amazon is sending out the message that it is here to stay.