Amazon Pay to Launch UPI Credit in Partnership with NPCI

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Three points you will get to know in this article:

  • Amazon Pay collaborates with NPCI for UPI credit services.
  • The initiative aims to enhance user satisfaction and convenience.
  • Recent RBI authorizations and strategic partnerships bolster Amazon Pay’s digital payment services.

Introduction to Amazon Pay

Amazon Pay is a digital wallet service that allows customers to use their Amazon account to make payments online or in-store. It is a convenient way to make payments without having to enter payment information each time. With Amazon Pay, customers can store their credit or debit card information securely on their Amazon account and use it to make purchases on or at any store that accepts Amazon Pay. In addition, Amazon Pay also offers features such as one-click ordering and the ability to save payment methods for future use.

Collaboration with NPCI for UPI Credit Services

Amazon Pay is collaborating with the National Payments Corporation of India (NPCI) to introduce credit services for customers using the Unified Payments Interface (UPI).

According to Vikas Bansal, Amazon Pay India’s whole time director, the company is keen on providing credit options via UPI to improve user satisfaction.

“Our aim is to innovate hand in hand with NPCI, and introducing credit on UPI is a significant step in that direction. We’re actively exploring ways to enrich the customer experience and value proposition,” Bansal stated to The Financial Express.

Expansion of UPI's Reach

Last June, the central bank broadened UPI’s reach by giving the green light to connect RuPay credit cards with the payments setup. Following that, in September of the same year, the Reserve Bank of India (RBI) also gave the nod for scheduled commercial banks to provide credit lines to their customers through UPI rails.

To put it simply, credit on UPI works like those buy-now-pay-later (BNPL) options you might have heard about. It lets you pay using the credit line your bank provides, even if you don’t have enough balance in your linked accounts or wallets. It’s like getting to shop now and settle up later!

Amazon's Fintech Division Authorization

The most recent update comes just two months after the Reserve Bank of India authorized Amazon’s fintech division to function as a payments aggregator (PA). Additionally, Amazon Pay also possesses a prepaid payment instrument (PPI) license, which was originally granted to the company in 2017.Top of Form

Earlier this month, the RBI also suggested the possibility of linking PPIs such as digital wallets with third-party UPI applications.

Amazon currently provides immediate credit through its BNPL service known as Amazon Pay Later, allowing customers to buy items on its platform and pay for them in monthly instalments.

According to the report, over 100 million customers are using Amazon Pay UPI for different transactions. Amazon, the major ecommerce player, states that Amazon Pay has partnered with 8.5 million brick-and-mortar sellers and over 10,000 online sellers.

Even though Amazon Pay received its PA license just this year, it has been actively teaming up with various financial institutions and fintech companies to attract new customers and enhance its digital payment services.

Strategic Partnerships and Collaborations

The fintech platform has joined hands with RBL Bank for UPI payments and has also collaborated with ICICI Bank for FASTag recharges, besides launching a co-branded credit card. Moreover, it has partnered with IDFC FIRST Bank and Karur Vysya Bank to offer Buy Now Pay Later (BNPL) products, and it’s reported to have garnered 9 million customer sign-ups.

Amazon Pay’s intention to introduce credit services on UPI follows closely behind news indicating that numerous non-banking financial companies (NBFCs) and fintech startups have appealed to the RBI for permission to extend credit on UPI, whether through credit cards or pre-approved credit lines.

However, the final decision rests with the central bank. According to reports, the RBI aims to guarantee that ‘credit on UPI’ functions effectively as a product before extending it to a broader range of players.

Potential Revenue Boost

Moreover, offering credit on UPI could potentially boost Amazon Pay’s revenue. According to reports, Amazon Pay India saw a modest 4% increase in operating revenue, reaching INR 2,093 Cr in FY23 compared to INR 1,998 crore in the previous fiscal year. Additionally, the company managed to reduce its losses by 13% year-on-year, bringing them down to INR 1,499 Cr during the same period.

Amazon Pay is partnering with the National Payments Corporation of India (NPCI) to introduce credit services for customers through the Unified Payments Interface (UPI). This collaboration aligns with Amazon Pay’s strategic vision to enhance user satisfaction. Additionally, the recent authorization from the Reserve Bank of India (RBI) for Amazon’s fintech division to function as a payments aggregator and the company’s strong partnerships with various financial institutions and fintech companies reflect a concerted effort to expand its digital payment services. With the potential to amplify Amazon Pay’s revenue, these initiatives mark significant strides in shaping the future of UPI-based financial services.

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