How is Amazon Pay Expanding Its Reach in India's Small Towns and Offline Payments?

Amazon Pay India, the digital payments arm of e-commerce giant Amazon India, aims to expand its presence in offline payments during this fiscal year.

This expansion involves introducing new payment methods and enhancing safety and security measures. The chief executive, Vikas Bansal, shared that Amazon Pay will offer various payment options such as

 Unified Payment Interface (UPI), credit cards, and wallets, rather than focusing on a single segment.

In addition, to the collaboration with ICICI Bank Ltd for credit cards, Amazon Pay is exploring more partnerships with banks and opportunities with the government's Open Network for Digital Commerce (ONDC). Moreover, Amazon Pay has received a prepaid payment instrument license and a payment aggregator license from the Reserve Bank of India, indicating its commitment to strengthening its consumer and merchant payments business.

Despite Amazon's smaller market share compared to competitors such as Google Pay, PhonePe, and Paytm. The company sees great potential in smaller towns. The Amazon Pay-Kearney report highlighted the increasing adoption of digital payments in tier-two and three cities. This shift presents an opportunity for Amazon Pay to expand credit offerings in these areas, where the use of credit is currently lower compared to metro cities.

According to the report, the growth in digital payments in India is largely driven by online channels, with a smaller percentage of consumers opting to pay with cash.

Furthermore, alternative payment modes such as wearables, voice-activated assistants, and 'buy now, pay later' (BNPL) plans are gaining popularity among consumers.

The next step of growth in digital payments will be fueled by increasing digital penetration among consumers in lower-income groups and smaller towns, indicating the need the encourage new payment methods like UPI Lite and UPI Lite X in these consumer segments.