Global e-commerce behemoth Amazon has pumped Rs 260 crore into its payments arm Amazon Pay. The new capital, meant to expand its wallet services beyond its marketplace, has been infused from Singapore-based Amazon Corporate Holdings and US-based parent Amazon, according to Registrar of Companies (RoC) filings.
Earlier this year, Amazon got approval from the Reserve Bank of India (RBI) to launch its wallet services in India. In a recent announcement, the firm also said that it will use Amazon Pay balance for booking tickets across BookMyShow.
According to media reports, Amazon has so far pumped over Rs 350 crore into its payments business.
A report in The Economic Times also stated that the company has recently increased its authorised capital for Amazon Pay from Rs 400 crore to Rs 2,000 crore.
Just last week, Amazon’s biggest competitor in India, Flipkart, had announced a commitment of close to $500 million in its payment subsidiary PhonePe.
This investment was in addition to the $75 million Flipkart had already infused in PhonePe since its acquisition in 2015.
On the back of Flipkart’s Big Billion Days sale this year, PhonePe claimed to have recorded over 16 million transactions in September 2017, a company statement read.
Last week, the RBI also released a fresh set of master guidelines for the operation and issuance of prepaid payment instruments (PPIs) and digital wallets in the country.
While allowing interoperability with other wallets and PPIs as well as bank accounts (in later stages), the Central Bank also mandated full KYC compliance for all existing and new digital wallets by October next year.
In an earlier story, YourStory had highlighted that this new direction can dramatically increase the cost of operations for payments companies.
Bala Parthasarathy, Co-founder of MoneyTap, says the cost of a single Aadhaar-based KYC can range between Rs 70 and Rs 300 depending on system efficiencies of payments players.
Industry participants claim that the cost to collect one document for KYC can run between Rs 100 and Rs 250 in the physical world.
If that wasn’t enough, media reports suggested that the Indian government was also considering imposing a ‘security fee’ as digital cess for every digital payment.
Making digital payments inherently costlier, this could adversely affect the government’s aim to achieve 25 billion digital payment transactions by next year.
These developments raise bigger questions on the operation of ‘captive wallets' like Ola Money, PhonePe wallet (merged with a wallet licence from Flipkart’s subsidiary FX Mart), BookMyShow, and to a certain extent even Amazon Pay, which are used to give customers refunds and cashbacks.