US e-commerce company Amazon has been granted a wallet license as it steps up its effort to boost its business in India. The electronic and cloud computing colossus has sought the license in order to ensure customers paying experience using Amazon’s platform in India will experience less friction. The multinational corporation headquartered in Seattle was awarded the license in March, but only officially announced it this week.
Currently, Amazon customers are forced to go through a two-factor authentication process for each purchase they make, this is in accordance with national law in India. A wallet license will significantly change things by enabling customers to deploy-top-up their wallet for future purchases, but it also gives Amazon an effective channel for cashbacks offers, faster refunds and other incentives.
It has been disclosed that Amazon has spent in the region around $5 billion to develop its strategies and business in the Indian market and it utilized a 2014 investment in Qwik-Cilver to enable gifting and gift-cards using the startup’s wallet license. However, many experts and analysts are now suggesting that the gifting service, which was subsequently rebranded to Amazon Pay in December last year – is where the US e-commerce firm is likely to deploy its own license.
The timing of the announcement by Amazon in relation to its wallet license seems to be a direct response to news of rival Flipkart’s revelation that it boosted its coffers with a record $1.4 billion funding round from China’s Tencent, Microsoft and eBay. Amazon was initially awarded the license in March, but declined to announce it publicly until now.
Part of that deal saw eBay sells its Indian business to Flipkart. Prior to Amazon being awarded a wallet license, the US organization was already flexing its muscles in the Indian e-commerce market and plans to continue to expand aggressively in the region. Flipkart on the other-hand has gone through a top-level revamp, while key investors attempt to push another home-grown online retailer Snapdeal for a potential sale to Flipkart or Alibaba-backed Paytm.
Expectations are that it would be three-way fight in the Indian e-commerce market among Amazon, Alibaba and Flipkart, which is consolidating its position through mergers, with backing of strategic investors.