HT TECH wants to start sending you push notifications. Click allow to subscribe

Amazon, Google vie for piece of India's digital payment market

In a market where cash is still king, digital payments are quickly gaining ground as India’s 1.3 billion people are starting to embrace online shopping and services such as online gaming and streaming.

By: BLOOMBERG
Updated on: Aug 21 2022, 15:33 IST
Every fintech company also has to use India’s open payments platform, guaranteeing interoperability so money can be transferred between any of more than 100 traditional banks and digital services like Google Pay -- all without fees. (Pixabay)
Every fintech company also has to use India’s open payments platform, guaranteeing interoperability so money can be transferred between any of more than 100 traditional banks and digital services like Google Pay -- all without fees. (Pixabay)

Technology giants Facebook Inc., Amazon.com Inc. and Google and credit-card providers Visa Inc. and Mastercard Inc. are among those vying for unprecedented access to India’s burgeoning digital retail payments market. The companies are part of four consortia preparing to apply for licenses to operate retail payments and settlement systems in the country, people familiar with the matter said. More companies could band together before a March 31 application deadline.

With India’s smartphone user base approaching 1 billion and Credit Suisse Group AG predicting $1 trillion in online payments in the country in 2023, the companies chosen to enable such transactions stand to reap lucrative commissions.

You may be interested in

Mobiles Tablets Laptops
Google Pixel 7A
  • Charcoal
  • 8 GB RAM
  • 128 GB Storage
₹43,999
Check details
Google Pixel 7 5G
  • Obsidian
  • 8 GB RAM
  • 128 GB Storage
₹49,999
Check details
Google Pixel 7 Pro 5G
  • Obsidian
  • 12 GB RAM
  • 128 GB Storage
₹58,999
Check details
Google Pixel 6A
  • Charcoal
  • 6 GB RAM
  • 128 GB Storage
₹26,499
Check details
Asus VivoBook 15 X515JA BQ322WS Laptop
  • Transparent Silver
  • 8 GB RAM
  • 512 GB SSD
₹35,990
Check details
Lenovo Ideapad 3 15IML05 81WB012DIN Laptop
  • 8 GB RAM
  • 256 GB SSD
₹39,499
Check details
HP Pavilion 15 ec2004AX
  • Shadow Black
  • 8 GB DDR4 RAM
  • 512 GB SSD
₹54,890
Check details
Acer Aspire 5 A515 57G Laptop
  • 16 GB RAM
  • 512 GB SSD
₹50,001
Check details
Google Nexus 9 16GB Wi Fi
  • Black
  • 2 GB RAM
  • 16 GB Storage
₹34,990
Check details
Google Pixel C 64GB
  • Black
  • 3 GB RAM
  • 64 GB Storage
₹99,990
Check details
Honor Pad 8 6GB RAM
  • Blue Hour
  • 6 GB RAM
  • 128 GB Storage
₹31,999
Check details
Nubia Pad 3D
  • Gray
  • 8 GB RAM
  • 128 GB Storage
₹87,990
Check details

“India’s mobile digital payments is seeing huge growth in a post-pandemic world,” said Vijay Shekhar Sharma, founder and chief executive officer of New Delhi-based payment provider Paytm. “It’s a good time to open up more diverse payments solutions and keep the momentum going.”

One of the consortia consists of Amazon, Visa, Indian retail banks ICICI Bank Ltd. and Axis Bank Ltd. as well as fintech startups Pine Labs and BillDesk. Another group is led by billionaire Mukesh Ambani’s Reliance Industries Ltd. and its partners Facebook and Alphabet Inc.’s Google, which together agreed to invest more than $10 billion in Reliance’s digital services unit last year.

ALSO READ: Reliance partners with Google, Facebook for digital payment network bid: Report

Sharma’s Paytm heads a group that includes ride-hailing startup Ola and at least five other companies. The fourth consortium consists of Tata Group, Mastercard, telecom operator Bharti Airtel Ltd. and retail banks Kotak Mahindra Bank Ltd. and HDFC Bank Ltd.

Sharma, a spokeswoman for Tata Group and a spokesman for Google declined to comment on the potential bidders. Amazon and Facebook didn’t respond to emailed questions. The contest is fierce as regulator Reserve Bank of India is expected to give just one or two licenses, as implied in its notification inviting bids. The process to decide the winners could take at least six months and it could be a further year or more before the systems and solutions come into use.

The winners will take on National Payments Corporation of India, the sole pioneering umbrella organization backed by more than 50 retail banks. Its Unified Payments Interface, or UPI, protocol debuted in 2016 and set the digital payments arena afire by allowing users to link their phone numbers to their bank accounts. That made transferring and receiving money via apps as easy as sending a text message, allowing large scale and high volumes of transactions to happen at minimal cost.

“The regulator probably doesn’t want concentration risk as the UPI backbone has become critical to the economy,” said Nandan Nilekani, who conceived and built a biometric identity database the system uses to identify users. “With more licensees and these systems presumably being able to operate seamlessly with each other, the aim seems to be to reinvigorate innovation and push digital payments even deeper into the country,” said Nilekani, co-founder and chairman of IT services company Infosys Ltd.

ALSO READ: Pine Labs's new app will bring contactless, cashless payments to everyone

Though commissions on digital payments are thin, the volume is potentially huge as India tries to reduce its reliance on cash. Card and mobile payments represented only 21% of $781 billion in retail purchases at brick-and-mortar stores in 2019, according to an estimate by S&P Global Market Intelligence.

The new licensees could make money by charging businesses transaction fees. They can also break new territory by setting up and operating ATMs, point-of-sale systems, remittance services and new innovative payment solutions.

“There seems to be a prime mix of regulatory support and innovation attracting investors to the space right now,” said Anis Uzzaman, general partner and chief executive officer of Silicon Valley-based Pegasus Tech Ventures, an investor in Robinhood and other fintech startups. “A new generation of entrepreneurs is grabbing the opportunity.”

By Saritha Rai

Follow HT Tech for the latest tech news and reviews , also keep up with us on ,Twitter, Facebook, , and Instagram. For our latest videos, subscribe to our YouTube channel.

First Published Date: 04 Mar, 07:26 IST

Sale

Mobiles Tablets Laptops
19% OFF
Google Pixel 6 Pro
  • Stormy Black
  • 12 GB RAM
  • 128 GB Storage
₹40,500₹49,999
Buy now
18% OFF
Google Pixel 7 5G
  • Obsidian
  • 8 GB RAM
  • 128 GB Storage
₹40,900₹49,999
Buy now
9% OFF
Google Pixel 7A
  • Charcoal
  • 8 GB RAM
  • 128 GB Storage
₹39,990₹43,999
Buy now
12% OFF
Google Pixel 6
  • Stormy Black
  • 8 GB RAM
  • 128 GB Storage
₹43,999₹49,999
Buy now
33% OFF
Xiaomi Pad 6
  • Black
  • 6 GB RAM
  • 128 GB Storage
₹26,999₹39,999
Buy now
38% OFF
Lenovo Tab M10 Plus 3rd Gen LTE
  • Storm Grey
  • 6 GB RAM
  • 128 GB Storage
₹20,999₹34,000
Buy now
27% OFF
Nokia T21 LTE
  • Charcoal Grey
  • 4 GB RAM
  • 64 GB Storage
₹15,249₹20,999
Buy now
48% OFF
Xiaomi Redmi Pad 6GB RAM
  • Graphite Grey
  • 6 GB RAM
  • 128 GB Storage
₹14,999₹28,999
Buy now
29% OFF
Asus VivoBook 15 X515JA BQ322WS Laptop
  • Transparent Silver
  • 8 GB RAM
  • 512 GB SSD
₹36,249₹50,990
Buy now
20% OFF
Lenovo Ideapad 3 15IML05 81WB012DIN Laptop
  • 8 GB RAM
  • 256 GB SSD
₹36,795₹45,900
Buy now
15% OFF
HP Pavilion 15 ec2004AX
  • Shadow Black
  • 8 GB DDR4 RAM
  • 512 GB SSD
₹54,999₹64,555
Buy now
40% OFF
Acer Aspire 5 A515 57G Laptop
  • 16 GB RAM
  • 512 GB SSD
₹53,990₹89,999
Buy now
NEXT ARTICLE BEGINS