Amazon Pay India Expands Into Offline Payments and Small Towns with New UPI and Credit Card Options

Amazon Pay India, the digital payment branch of Amazon India, plans to expand its reach into offline payments this year. The company aims to introduce new payment methods and improve safety measures to reduce fraud, according to CEO Vikas Bansal.

Expanding Payment Options

Amazon Pay will offer a range of payment options like Unified Payments Interface (UPI), credit cards, and digital wallets. “We see big opportunities in offline stores, new payment methods, and continued investment in safety to reduce fraud. We are also investing more in UPI,” Bansal said during the release of a report called “How Urban India Pays,” done with consulting firm Kearney.

Following its successful collaboration with ICICI Bank for credit cards, Amazon Pay is looking to partner with more banks and explore opportunities with the government’s Open Network For Digital Commerce (ONDC).

Amazon Pay-ICICI Bank Credit Card Success

With over 4.2 million users, the Amazon Pay-ICICI Bank credit card makes up about 28% of ICICI Bank’s total credit card users. Amazon Pay has also launched voice-based UPI payments through Alexa-enabled devices.

Strengthening Market Position

Although Amazon’s share in the Indian retail payments market is smaller compared to Google Pay, PhonePe, and Paytm, it is making efforts to grow. These include securing a prepaid payment instrument license and a payment aggregator license from the Reserve Bank of India.

Opportunities in Small Towns

Bansal highlighted the growing adoption of digital payments in smaller towns. The Amazon Pay-Kearney report showed that 65% of transactions in tier two and three cities were digital, compared to 75% in larger cities. “It’s a positive surprise that the gap between small towns and large metros like Mumbai is now only 10%, showing significant improvement,” Bansal noted.

Expanding Credit Use

With the increase in digital payments, Bansal sees a chance to expand credit usage in small towns. “Credit use is less in small towns than in big cities, which presents an opportunity,” he said.

Digital Payment Trends

The report found that the growth in digital payments in India is mainly driven by online channels like e-commerce platforms. Only 10% of consumers prefer paying with cash online, while 52% of offline transactions still use cash.

Other payment methods like wearables, voice-activated assistants, and “buy now, pay later” (BNPL) plans are also becoming more popular. “BNPL is a credit-based payment option, especially for transactions under ₹5,000. About 87% of respondents are aware of it, but only 34% use it,” the report stated.

The next wave of digital payment growth is expected to come from increased digital adoption among lower-income groups and smaller towns. New methods like UPI Lite and UPI Lite X should be promoted among these groups, the report added.