Reserve Bank of India (RBI) has issued a wallet license, also known as pre-paid payment instrument (PPI) license to Amazon Online Distribution Services. The license so granted is valid only until 31 March, 2022 and will allow the e-tailer to operate its own payment gateway in India. It is expected that the company may link its wallet service (possibly underway!) to Amazon Pay – an already existing payment checkout option.
Early in March 2016, we reported that Amazon has applied for a license of wallet through its subsidiary company ‘Amazon Online Distribution Services(AODS)’. Back then, the company neither confirmed nor denied these reports. In a rather diplomatic way, it replied to our queries and said,
A trusted, easy, convenient and friction-free payment experience has always been one of company’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.
The license issued by RBI to the company counterattacks Flipkart, who is looking to forward its invest in its UPI-powered digital wallet solution called PhonePe. Binny Bansal, CEO of Flipkart said that a large part of the money raised from the latest deal struck with Tencent, Microsoft and eBay will be invested in new businesses, especially fintech, in particular, PhonePe.
Now, the wallet will essentially help Amazon drive revenues from its payment service Amazon Pay. Amazon Pay currently works on Amazon website and is limited to a few third-party vendors such as Cafe Coffee Day, Crocs among others. It will help the company to score in the potential-filled fin-tech space of India.
However, if a wallet service by Amazon comes into play, it will have to bear the brunt of well-established players such as FreeCharge, Paytm and MobiKwik, among others. It’d have to introduce one-of-its-kind features to its wallet service and will have to shower huge discounts and schemes for a successful kick-off. That might not be such an issue for the platform, which exerts discount pressure on users to purchase through its Pay service on its website. And also because its coffers are flooded with a recent $3 billion investment from its founder Jeff Bezos.
The most significant benefit of Amazon’s wallet service will be the dismissal of the two-factor authentication process, currently required during net banking and card transactions. A user will soon be able to simply store money in their Amazon wallets and transact without the need of authentication each time. Due to the slow process and dangers involved with net banking and card payments, e-commerce sites tend to lose customers. With a wallet in hand, it will be a concern of past for the platform.