NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, August 29, 2018

Ecommerce companies have had to innovate in India not just with technology, but also with business models and processes to entice the conservative Indian consumer to try out online purchases. While cash-on-delivery was one such tweak—never used in the credit-card-driven advanced economies—finance in Indian ecommerce is all primed for its next step in the evolution of digital payments, beyond just payments.

Two investments made by Amazon in India in recent times point to what’s next. In April, it invested ₹144 crore ($22 million) for an undisclosed stake in Bengaluru’s online lender Capital Float, which specialises in lending to small and medium businesses, but more recently has also diversified into consumer loans. The following month, Amazon led a ₹82 crore ($12 million) investment in Mumbai-based insurance tech company Acko General Insurance Ltd, alongside other investors.

Slowly, but steadily, Amazon—which has previously invested in BankBazaar as well—is laying the groundwork for building an ecosystem of financial products and services around Amazon Pay, its digital payments method. Coupled with its partnerships with an increasing number of merchants, Amazon is clearly widening the range of options on Amazon Pay as it takes on Paytm, widely seen as the market leader in this space.