Amazon Pay, the digital payments arm of ecommerce giant Amazon India, has received a payment aggregator (PA) licence from the Reserve Bank of India (RBI), strengthening its merchant payments business. It can now offer online merchant payment services and has 6.6 crore wallets with operational revenue of Rs 2,093 crore in FY23.
What is a payment aggregator licence?
A payment aggregator licence allows a company to operate as an intermediary between merchants and payment processors or banks. This model is often used by businesses that operate online marketplaces or platforms where multiple sellers offer goods or services. As part of the process, PAs pool the funds received from customers and transfer them to merchants after a certain time period. The RBI has issued guidelines for PAs to ensure compliance with various norms such as capital requirements, governance structure, security standards, customer grievance redressal mechanism, etc.
Why is it important for Amazon Pay?
A payment aggregator licence will allow Amazon to strengthen its merchant payments business, a major opportunity for the ecommerce giant given its large online shopping business in India. Amazon Pay also operates a consumer-focused mobile wallet which can be used for all forms of digital and UPI payments. According to a report by RedSeer Consulting, Amazon Pay had a market share of 15% in the UPI transactions volume in December 2023, behind PhonePe (44%) and Google Pay (35%). With the PA licence, Amazon Pay can offer more value-added services to its merchants and customers, such as instant refunds, cashbacks, loyalty points, etc.
Who else has this licence?
Around 10 companies have received this licence since the start of the year 2024. These include Zomato, Google Pay, Zoho, Juspay, Decentro and others. Zomato, the online food delivery platform, received the PA licence in January 2024 and said it would help it streamline its payment processes and enhance customer experience. Google Pay, the leading UPI app in India, received the PA licence in February 2024 and said it would enable it to offer more payment options and features to its users. Zoho, the software-as-a-service company, received the PA licence in March 2024 and said it would help it integrate its various products and services with online payments.
How did Amazon Pay react?
“We are excited and thankful to receive the final authorisation from the Reserve Bank of India (RBI) to function as a Payment Aggregator. We remain committed to simplify lives and fulfill the aspirations of merchants and customers,” an Amazon spokesperson said. The spokesperson also thanked the RBI for its guidance and support throughout the process and said that Amazon Pay would continue to work closely with the regulator to ensure compliance with all the applicable rules and regulations.
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