Amazon Pay enters deposit booking in India, will it face RBI heat just like Google Pay?

As India’s central bank keeps a close watch on Big Tech firms like Google, Amazon, Facebook, Apple and Microsoft from entering the country’s financial services sector, Amazon Pay India has announced to offer deposit booking services for its customers in the country.

The move comes within days of its rival Google Pay launching a similar facility with Equitas Small Finance Bank for allowing its users to book deposits, which has already invited regulatory attention. Following Google Pay’s announcement, reports mentioned that the deal between Google and the bank is under RBI’s watch for its implication on the financial landscape in the country.

The Amazon-owned subsidiary has said it will tie up with investment platform through which Amazon Pay’s customers will be able to invest in mutual funds and fixed deposits.

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According to a company statement, “Kuvera will provide its services, products and technology know-how to create an exclusive experience for Amazon Pay’s users to facilitate investments into mutual funds, fixed deposits, and more over time.”

Big Tech Under RBI Lens

The Reserve Bank of India (RBI) recently highlighted the likely issues around big tech’s role in the financial services sector and said that concerns such as level playing field with banks and operational risks have intensified lately.

RBI’s ‘Financial Stability Report’ for July noted that Big Tech offers a wide range of digital financial services and has a substantial footprint in the payment systems, crowdfunding, asset management, banking and insurance of several advanced and emerging market economies.

“Specifically, concerns have intensified around a level playing field with banks, operational risk, too-big-to-fail issues, challenges for antitrust rules, cyber security and data privacy,” it said.

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“For central banks and financial regulators, financial stability objectives may be best pursued by blending activity and entity-based prudential regulation of big tech,” the report said.

Amazon Pay Still Far From Market Dominant Position

Launched in 2016 by Gaurav Rastogi, Neelabh Sanyal and Mayank Sharma, Kuvera is a direct mutual fund investment platform, which also offers lending and digital fold investments. Like most investment platforms, it also provides access to a range of advanced solutions and services to help investors make the most of their investments. Currently, the company claims to have over 10 lakh users and INR 28,000 Cr in assets under advice since starting.

“At Amazon Pay, our vision is to simplify lives and fulfil aspirations by solving payment and financial needs of every Indian. For our most engaged customers, growing their wealth and investments is a large need; here is where, we think, Kuvera can help our customers with their unique offering,” said Amazon Pay India’s director, Vikas Bansal.

Prior to this announcement, Amazon Pay received an infused capital of INR 225 Cr from its parent company Amazon. Most of the fresh capital came to Amazon Pay India through Amazon Corporate Holdings, a Singapore-based parent entity that operates the e-commerce giant’s India businesses.

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In October last year, the company also launched credit card payments on its digital payments app and customers can pay via internet banking or the UPI. In addition, the company offers insurance services on its platform. 

However, despite these features, Amazon Pay is still far from occupying a market dominant position. According to KalaGato’s teardown report on UPI-enabled fintech platforms, from November 2020, Google Pay had emerged as the most dominant payments app in terms of reach among internet users (65% reach), followed by PhonePe with 63% and Paytm with 57% reach as of November 2020.