Amazon India Gets RBI Approval To Launch E-Wallet Services

After Flipkart and Snapdeal, Amazon is set to enter the digital payments market in India.

Amazon India, on Thursday, said it has received Reserve Bank of India (RBI) approval to operate a Pre-Paid Instrument (PPI), or its own digital wallet, giving the Seattle based e-commerce giant an opportunity to grab a part of the growing but increasingly crowded digital payments pie.

The development was first reported by Medianama.
“We are pleased to receive our PPI license from the RBI. Our focus is providing customers a convenient and trusted cashless payments experience.”
Sriram Jagannathan, VP Payments, Amazon India.

In March, the RBI issued draft guidelines suggesting higher capital requirement for entities offering PPIs and tougher know your customer (KYC) norms for customers using these services. According to the draft proposals, all entities seeking fresh approvals to launch PPIs will need to have an audited net worth of Rs 25 crore, which must be maintained at all times.

The RBI also proposed to tweak an earlier provision where you could hold up to Rs 10,000 in a ‘minimum information’ PPI account. PPI issuers will now have to convert every ‘minimum information’ account into a fully KYC compliant account within 60 days. In the interim, customers can hold up to Rs 20,000 in the account.

In his statement, Jagannathan said that the company hopes the regulator will continue with the existing simpler KYC norms to ensure that the use-case for wallets does not diminish.

“RBI is in the process of finalizing the guidelines for PPIs. We look forward to seeing a continuation of the low limit wallet dispensation with simplified KYC and authentication,” said Jagannathan.

Amazon has been inching towards an entry into digital payments for the last few months.

In December Amazon had launched its Pay Balance service to encourage cashless transactions, where customers can fund their prepaid balance using internet banking or credit and debit card. However this service was restricted to transactions on Amazon.

Last February, Amazon had acquired Noida based payments solution provider EMVANTAGE Payments Pvt Ltd for an undisclosed amount. The same month it also roped in former Citibank executive, Sriraman Jagannathan to head its payments business.

Amazon had applied for a wallet license last year in the name of Amazon Online Distribution Services Private Limited. The license was issued to Amazon on March 22 and is valid till the March 31, 2022.

The approval for Amazon’s e-wallet comes at a time when all major e-tailers, Flipkart, Paytm and Snapdeal, have launched their own wallets. The volume of transaction through PPIs has also risen, particularly in the months after demonetisation. According to RBI data, volume of payments through PPIs rose from Rs 1320 crore in November to Rs 2150 crore in March.

Amazon venturing into the digital wallet space could provide some competition to Paytm, said Harish HV, partner at Grant Thornton.
“This will not only boost their sales, but can give good competition to Paytm which has been ruling the wallets game in India, if they plan to run it as an independent business. How serious is Amazon about the wallet business remains to be seen.”
Harish HV, Partner, Grant Thornton

PPIs are one part of the broader digital payments space, which also include newly launched services built on platforms like the United Payments Interface (UPI). The government promoted BHIM is one such service. BharatQR, a QR-code based payment service, is another competitor to PPIs. According to a recent report by advisory firm IMAP, the volume of payments on digital platforms in India could hit $500 billion by 2020.

Source:; 12 April 2017

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