Amazon India steps up insurance and credit biz, riding on its payments app
Amazon, the world’s largest online retailer, is eyeing to tap multiple sectors in the country ranging from insurance, wealth management to credit through its digital payments arm Amazon Pay. The Jeff Bezos-led firm is making inroads in India's booming digital payments market and competing with Walmart-owned PhonePe, Alibaba-backed Paytm, and Google's mobile payment service Google Pay.
“We are making inroads into these spaces,” said Mahendra Nerurkar, CEO and MD for Amazon Pay India, during a fireside chat at Global Fintech Fest 2020 on Wednesday night. "Buying insurance is typically not an easy purchase. There's a lot of fine print. So, a lot of customer feedback is can you ‘Amazonify insurance’ and make it very simple. That problem statement really energizes us.”
The company has partnered with Acko General Insurance to offer insurance for two-wheelers as well as four-wheelers. It has also launched Covid-19 health insurance to all its sellers in the country. In April, Amazon Pay launched ‘Amazon Pay Later’, a service that extends a virtual line of credit to eligible customers. It partnered with digital lender Capital Float and The Karur Vysya Bank (KVB) for this.
“I think there are a lot of opportunities as we think about micro-insurance products. Whether you're buying a product on Amazon or a flight ticket or you're taking a cab, you will see a lot of innovation in all those spaces from us in the coming months,” said Nerurkar.
Nerurkar was of the view that doing just basic digital payments is an “old school business model.” One might see payment players reinventing themselves by offering a lot of value-added services to customers and the merchants. These include catering to very specific customer segments like neo-banks for farmers.
Amazon Pay, which started as a wallet provider a few years ago now offers a whole spectrum of categories ranging from money transfer, bill payment to paying the merchants. Fundamentally what Amazon Pay is trying to solve is taking the cash customers on the digital mode of payment and then enabling them with more services. Nerurkar said the Covid-19 pandemic has actually provided a tailwind to an already fast-growing Unified Payments Interface (UPI) ecosystem.
“We're seeing consumers adopt the whole spectrum of services within our app, as they're using UPI, not only for doing a bill payment or money transfer but they're equally using it to buy their groceries,” said Nerurkar.
It is not just the big cities, where Amazon Pay is witnessing demand for its service. Customers and merchants from Tier-4 and Tier-5 cities are also using the platform.UPI is a big catalyst for driving that.
Amazon is also betting big on building innovation in the area of payments. For instance, Amazon customers in India can now pay for electricity, water, gas, and other bills using the Alexa voice assistant. Last month, Amazon Pay launched the ‘Smart Stores’ in India which enables local shops contactless discovery of their products and payments. Customers need to scan the shop’s QR code using the Amazon app to begin exploring the products available within the store. The 'Smart Store' feature would empower local shops with capabilities to increase footfalls, improve customer experience and generate more sales. Amazon Pay is taking many of the innovations implemented in India to the global markets.
Nerurkar also sees a huge potential of biometric and voice-based technologies in the area of payments and making multi-factor authentication procedures seamless and to reduce frauds.
“I think voice does present a very exciting frontier because everybody's voice is (unique),” said Nerurkar. “It will take some time for us to perfect the technology and make it robust. But I'm very optimistic that these kinds of technologies are the ones which will be the future.”
The market in India that Amazon Pay is tapping is huge. The digital payments space in India is expected to rise fivefold to reach $1 trillion by 2023, and it would be led by the growth in mobile payments, according to a report by financial services company Credit Suisse.
“Right now 90 per cent of payments in this country are still cash,” said Nerurkar. “We are just scratching the surface.”