Amazon Inc. has been adding features and putting in investments is several new sectors of the Indian market for the past few weeks. This time the retail giants made way into financial services of the country by adding gold and insurance to their already large list of services they provide in the subcontinent. This is expected to attract more customers and subscribers to the prime program.
The financial technology (fintech) sector has seen several new additions in terms of competition in the last few months. In June, news circulated that the riding company Grab would start a new fundraising campaign to develop features such as financial services.
The Indian market poses a big problem for these new companies trying to get into the competition. The Indian market still runs on a predominantly cash-based system where most adults do not have a bank account. Therefore, companies struggle to make a profit.
Several measures have been taken up over the years by the government to change this. The digital India campaign has been out for a long time now but could not turn many heads. Not unless in recent times as the COVID-19 pandemic forced the country to pay online to restrict the spread of coronavirus.
Over the years we have also seen a substantial number of companies adding in their payment feature by creating an in-app wallet. Amazon, being already a heavyweight player in the retail segment added its Amazon Pay Digital Wallet back in 2016. Since then the wallet feature of the conglomerate has revised a lot. The company added in credit card facility and also signed up to a state-backed payments network. The company’s wallets also let users make payments in a large array of segments. For example, users can pay directly using the Amazon wallet in the movie and flight tickets and also pay telephone or other utility bills and also recharge their or someone else’s mobile phone.
In July the conglomerate introduced auto insurance and then in August, they introduced gold investment. They also had gone into the pharmaceutical industry as they launched Amazon Pharma. For the gold investment, the behemoth Amazon partnered with SafeGold to allow users to buy digital gold for as low as ₹ 5.
Mahendra Nerurkar, head of Amazon Pay India aims to make their payment system the default payment system of people’s choice in the subcontinent. Amazon Pay has grown substantially over the years. They have signed up 4 million merchants.
Reuters reported Nerukar saying, “Apparently Chinese fashion designers are leaving the back pockets off jeans because no one uses them anymore (for wallets). We would love to make that happen in India.”
India’s digital payment system is expected to expand for the coming years. So much so that Livemint reported a study by professional services firm PwC and Indian lobby group ASSOCHAM predicting that the market will more than double in value and reach $ 135 million by 2023 from 2019.
Lately, the government imposed a ban on high-value notes in 2016 also added in users to the system. Companies like Alphabet Inc’s GooglePay, Walmart Inc’s PhonePe, and SoftBank Group Corp backed Paytm rolled into the market opening their own payment gateways. Facebook might also come in as a rival to these companies. The social media giant owned Whatsapp has over 400 million active users in the country. They have been on hold for approval of their own payment system by the government for over two years.
Profits in these markets are not much and the amount of competition also makes it harder for the companies. Paytm has incurred a loss of hundreds of millions of dollars over its decade of existence and phone-pe also targets to turn profitability by 2022 as reported by Livemint. Amazon, therefore also has put in services like insurance and lending.