Banking / Finance

Digital Wallet game: Amazon enters the digital payment market in India

02nd Jun `17, 02:00 AM in Banking / Finance

Amazon India recently received its wallet license from the Reserve Bank of India, meaning it’s about to get…

BDMS
Guest Contributor
 

Amazon India recently received its wallet license from the Reserve Bank of India, meaning it’s about to get easier for online shoppers to complete their purchases using Amazon Pay. The license took effect on March 22, 2017, and will remain valid through March 2022, as Medianama reports.

So how will getting licensure for this Prepaid Payment Instrument (PPI) affect Amazon’s eCommerce outlook in India? As the Economics Times points out, it will likely help Amazon “drive the adoption of Amazon Pay by opening up the number of payment use cases.” The key is that this development will streamline how shoppers can pay for online and offline purchases through Amazon partners.

Customers in India currently have to go through two-factor authentication for every purchase. Typing in their card number and CVV is not enough; from there, users have to enter a temporary password sent to their phone or enter a password through their bank portal. The security benefits are obvious, but every extra step increases the likelihood of an error or a customer abandoning their cart. Amazon Pay allows users to make secure transactions with third-party websites without having to pause and re-enter additional payment information because they authenticate when they top off their account.

As Tech Crunch writes, Amazon’s wallet license will allow customers to bypass this clunky authentication by filling and using their wallet for future one-click purchases. Due to national law, wallet licenses are the only way for shoppers in India to check out with a single click. Amazon’s PPI will also give the company an efficient channel for sending out cash-back offers, incentives and speedy refunds to build loyalty.

This may sound underwhelming if you’re one of over 23 million people who have already clicked the “Pay with Amazon” button on a third-party site to check out. But for India’s e-commerce market, this represents an exciting new development. While eCommerce junkies stateside are still discussing comparisons between Shopify Plus and Magento Enterprise, India’s eCommerce industry is still largely undeveloped. Amazon and competitors like Paytm are working to stake out their share of the market while it’s up for grabs.

That’s not to say that it isn’t growing rapidly, however. Statistics from DigiPerform show just how this burgeoning market is poised for “6x growth over 5 years…driven by factors like new-age technology, convenience, higher adoption rates and larger reach.” With a market around $16 billion in 2015, India’s e-commerce landscape is projected to grow to over $40 million by 2018 and almost $102 million by 2020. Even as recently as 2013, India’s eCommerce industry only totaled around $3 billion dollars. The exponential growth is striking, and any e-commerce developments that make it easier for customers to shop on- and off-line with their favorite vendors will undoubtedly contribute to the overall expansive trend.

Another reason for the rise in digital payment in India is the recent push for demonetization. According to Business Insider, the Indian government took 500 and 1,000 rupee notes out of circulation in late 2016. While there was an initial 15-20 percent drop in eCommerce sales, the use of alternative payments has grown over 400 percent since the demonetization.

All the little purchases that consumers are not able to make without cash add up over time, which is why digital payment has the power to pack some serious purchasing power. A cashless customer might have to keep walking right by Café Coffee Day, but one with access to an online wallet can stop inside and order a mid-morning beverage, for instance.

One thing is clear: eCommerce retailers are helping to drive the omni-channel sales experience forward in leaps and bounds in India, and around the world.

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