Paytm and MobiKwik, India’s largest mobile wallet companies, had better pad up for their biggest competition yet.

For, Amazon is preparing to enter the mobile recharge segment, which accounts for nearly one-third of spending on mobile wallets, with Amazon Pay, two sources confirmed to FactorDaily. Both sources didn’t want their names used in this article.

Amazon, the world’s biggest internet retailer, has revealed little about what it wants to do with Amazon Pay and it didn’t comment on this story. “We are pleased to receive our PPI licence from the RBI. Our focus is providing customers a convenient and trusted cashless payments experience,” it had said in a statement when it had received regulatory permission in mid-April.

PPI stands for prepaid payment instrument, which is used for purchasing goods, services and even for transferring money — exactly what Paytm and MobiKwik do.

News reports say Amazon is already in discussions with insurance and electricity distribution companies to get them to accept payments via Amazon Pay. Orders placed on food delivery platforms such as Faasos and Box8 already accept the Amazon wallet. Housejoy, the UrbanClap competitor for services, in which Amazon is an investor, also does so.

Also read: MobiKwik stops cashback to start loyalty programme, reduce burn by 25%

The service that Amazon is betting big on is mobile phone recharges. “That’s a low-hanging fruit… After all, Paytm grew with recharges in its initial days,” one of the sources said.

Digital payments, especially through mobile, gained momentum after India’s demonetisation exercise on November 8, which sucked out 86% of currency notes in circulation.

Reserve Bank of India (RBI) data shows India had 1.63 billion mobile wallet transactions in 2016-17 worth Rs 53,242 crore. The transaction volume grew 170% from 603.99 million in 2015-16 and value by 159% from Rs 20,584 crore.

Business lobby group Assocham, which together with RNCOS Business Consultancy put out a report on mobile wallet services in December, projects mobile payment transactions to touch Rs 32,00,000 crore (Rs 32 trillion) by 2020.

“That is an opportunity for Amazon, which has great technology and has already got a large ecosystem of sellers and buyers on its platform. With a wallet topped up with a lot of services, Amazon can be a potential threat to a large number of mobile payment companies,” said Sanchit Vir Gogia, CEO and chief analyst at Greyhound Research.

Spending on mobile wallets is led by money transfer, closely followed by recharges/bill payments and other commerce. In 2016-17, according to Assocham-RNCOS, the split stood at 38%, followed by 31% each on recharges/bill payments and other commerce.

The growth of mobile commerce and mobile wallets to make payments is why Amazon wants to bet on the payments ecosystem.
“Amazon needs to add a large number of service lines and categories. They have the user base volume to justify investments and more importantly use it as a platform to improve customer retention and increase sales by way of cross-selling and upselling,” said Gogia.

But, Flipkart, Amazon’s biggest rival in India, is not sitting idle. It has the PhonePe wallet, which allows users to recharge phones, DTH, and pay electricity and gas bills, and is ambitious when it comes to market share.

Apart from PhonePe, there are others that might become competitors for Amazon Pay, like the government’s BHIM app, PayU, FreeCharge, and Oxigen.

Also read: WhatsApp to launch peer to peer payments in India: Report

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