Feeling the heat of competition in digital payments from rival camp Flipkart, Amazon is going aggressive in widening the market for its own payments platform – Amazon Pay.
In its fourth investment in two years, the parent company has pumped in Rs 230 crore or $34 million into its Indian digital payments arm, according to Registrar of Companies filings sourced from data platform Paper.vc.
Amazon infused fresh funds to the tune of Rs 67 crore or about $10 million in Amazon Pay first in May 2017. In the subsequent round in July the same year, Amazon had invested over Rs 130 crore or about $20 million. The latest round comes just four months after the infusion of Rs 195 crore or about $30 million in March this year.
Amazon Pay’s India Head Mahendra Nerurkar had said in March this year that the company will continue to invest aggressively in its digital payments arm over the next several months. This implies that Amazon will lead several other investment rounds in Amazon Pay in this year.
The aim, Nerurkar said, was to develop more local innovations to solve problems that are unique to India. For instance, Amazon has launched debit card EMIs on its platform, in association with HDFC Bank.
Currently, the Amazon Pay service is used only purchases done only on the marketplace. Like Flipkart-owned PhonePe, Amazon Pay is now looking to push its wallet service beyond its marketplace to other online merchants across sectors such as grocery, fashion, automobile accessories, books, music, and entertainment among others.
However, Amazon India’s renewed push on digital payments comes at a time of slowdown in the sector. Stringent KYC norms set by the Reserve Bank of India for on-boarding customers for digital wallets has added extra cost of compliance and the friction has subsequently arrested the growth of new users.
As per RBI, digital wallet companies need to complete KYC verification of each customer with a transaction limit of Rs 1 lakh per month. Accounts with transaction limit of less than Rs 10,000 per month, on the other hand, can be accessed with a one-time-password verification of a mobile number and a valid government-recognized identity document.
The company acknowledges the drop in new user growth due to the guidelines and says it has increased friction for digital wallets. “I don’t think we’ve found the right solution yet as an industry and we’re working very closely with the regulators to find that solution,” Nerurkar had said in an earlier interview.