Amazon.com has added insurance and even gold into its menu of financial services in India, to grow its customer base and attract more subscribers to its Amazon Prime loyalty programme in a battleground growth marketplace.
The drive ramps up competition as FinTech rivals and their deep-pocketed overseas backers struggle for profitability at a predominantly cash-based market where roughly 190 million adults don’t have bank accounts.
To boost online payments, Amazon started its Amazon Pay digital wallet in 2016. It has since released a charge card signed up to some state-backed payments network, and processes payments for movie and flight tickets as well as phone and utility bills.
It started offering car insurance in July and gold investment products in August – both a first for Amazon.
Its attempts at dominating in FinTech have been modest in comparison, stymied in part by retailer reluctance to use services offered by their greatest retail competition.
In India, however, in which it’s over 100 million registered users, Amazon is better positioned to use financial services to gain contributors to its yearly $13 Prime plan which offers faster shipping and audio and video streaming, tech executives said.
To this end, the business aspires to create Amazon Pay the nation’s payment method of selection, said Mahendra Nerurkar, mind of Amazon Pay in India, that has signed up 4 million retailers.
“We would love to make that happen in India.”
India’s digital payment market is set to more than double in value to $135 billion by 2023 from 2019, revealed a study from professional services firm PwC and Indian lobby group ASSOCHAM.
A ban on high-value currency notes in late 2016 amplified a digital payment drive in India, together with Amazon joined in the sphere by Google, Walmart Inc’s PhonePe, and Paytm, backed by SoftBank Group Corp..
Later prospective entrants have faced tougher regulatory scrutiny. Facebook Inc’s WhatsApp, that boasts over 400 million consumers in India, has been awaiting approval to offer payment services for more than two decades as regulators wrestle with new data-localisation rules.
Nevertheless for incumbents, gain has been elusive. Paytm, additionally backed by Alibaba Group, has reserved losses running into the hundreds of millions of dollars. PhonePe has said it hopes to become profitable by 2022.
Truly, profit margins in the digital payments business are usually lean, so to make money, Amazon might need to rely on services such as lending and insurance, industry watchers said.
“It is likely that the next step for Amazon would be to distribute exchange-traded funds and mutual funds,” said Niren Shah, India mind of Silicon Valley company Norwest Venture Partners.
Others said Amazon’s utter muscle does not necessarily mean it could succeed in a marketplace as big and complex as India.
“It’s not going to be easy to win over the Indian fin-tech market,” said a man who declined to be identified due to a business relationship with Amazon. “It’s competitive and varied, so it’s going to be a slow process.”
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Sankalp Phartiyal and Nupur Anand. Editing by Jonathan Weber and Christopher Cushing.
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