Amazon Pay to find new clients; etailers’ focus set on digital wallets

Editor | Sep 15, 2020

The Indian ecommerce industry currently resembles an aggressive ongoing war with multiple battlegrounds. There are many mini-wars being fought to win the ultimate war. One battleground is private labels, another one is large appliances and the third one is digital payments.

Let’s take a close look at the third battleground.

Amazon Pay in the market for third-party clients

After infusing Rs. 67 crore into its payments arm Amazon Pay, the ecommerce giant has started work on expanding its business. Amazon’s e-wallet recently initiated payments on online services Housejoy, Faasos and Box8. The etailer’s aim is to make Amazon Pay an alternate source of revenue by tying-up with third-party companies.

By limiting its service to parent company would restrict Amazon Pay’s growth. Therefore, it is flying solo and penetrating into the e-payments industry.

Without disclosing any specific company names that it is partnering with, Amazon’s spokesperson said,

“We are always testing ways to improve experience for our customers and these experiments are part of that.”

Digital wallets gaining prominence

Paytm, Freecharge, and Mobikwik are the top three digital wallet players in India. Besides Amazon, its rival Flipkart has its own wallet PhonePe. While Paytm transitioned from being an e-wallet company to an online marketplace, thanks to Alibaba. Snapdeal acquired Freecharge, which is on-sale at the moment. The potential buyer could be either Mobikwik or Paytm.

The popularity of e-wallets touched a new high in the post-demonetised India. Online marketplaces that were looking to break away from cash-on-delivery rejoiced when online buyers started embracing digital payment methods.

So what is it about e-wallets that ecommerce companies particularly find irresistible?

According to the industry watchers, having their own payments arm gives an extra edge to ecommerce companies. This is why the top players are investing heavily into this department.

A digital wallet and payment entity enable etailers to:

  • Test the water in an emerging ecommerce market (Example: Alibaba)
  • Gain insights into consumer buying behaviour and spending pattern
  • Gauge the size and volume of ecommerce business
  • Offer features to ease payment transactions to its customer base
  • Encourage prepaid orders and reduce the volume of COD orders
  • Offer special previews, cashback, deals and discounts
  • Provide sense of security to customers who are wary of online payments

The above reasons along with few others are driving the growth of this ecommerce vertical. But how much would this help Amazon, Paytm and Flipkart to win the Indian ecommerce race is yet to be discovered.


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