Amazon first forayed into India fintech in 2016 with its Amazon Pay Wallet. The e-wallet has enjoyed modest success. Bernstein Research estimates it has a 16% share of India's payments market, No. 3 after Walmart-backed PhonePe (about 20%) and Google Pay (about 38%). The Times of India found that Amazon Pay processed 60 million transactions on India's dominant state-backed UPI network in May, behind Paytm's 125 million, PhonePe's 445 million and Google Pay's 541 million.
At the same time, Amazon Pay has signed up 4 million merchants and launched its Doorstep feature in 2018, allowing customers to use a cash pickup service to top up their wallets without requiring a bank account.
According to a June 2020 Assocham-PwC study, India's digital payments market is expected to reach $135.2 billion by 2023, an increase of more than 200% from USS$64.8 billion in 2019. Over the same time period, India's share of global digital payments transaction value is predicted to increase to 2.02% from 1.56%.
To be sure, payments are important to bring users into Amazon's nascent Indian digibanking ecosystem. But they are just the first step. After all, unto themselves, payments are thin margin and a dime a dozen in a market with more than 40 different e-wallets.
Thus far, Amazon has added a hodgepodge of other digibanking services, including a credit card, gold investment products and auto insurance. It has invested in online digital lender Capital Float, digital insurer Acko, gift card platform Qwikcilver, and BankBazaar, a financial products marketplace. None of these moves yet looks like a game changer.
“It is likely that the next step for Amazon would be to distribute exchange-traded funds and mutual funds,” Niren Shah, India head of Silicon Valley firm Norwest Venture Partners, told Reuters earlier this month.