Amazon and Shriram Finance target payment services sector in India #IndiaFinance

Payment services are again making headlines in India. Both Shriram Finance, an Indian non-banking finance company (NBFC), and online retail giant Amazon have recently made news with their plans for the sector.

The Shriram proposal is to offer payment services through mobile wallets, prepaid cards (such as food and gift cards), FASTag and more, providing a secure, convenient and efficient alternative to cash transactions for its customers.

FASTag is an electronic toll collection system in India that uses radio frequency identification (RFID) technology to facilitate contactless toll payments.

The bank will, however, have to gain the approval of the Reserve Bank of India (RBI) and authorisation as a Payment System Operator in accordance with the Payments and Settlement Systems Act, 2007, along with necessary approvals from other statutory bodies.

Shriram Finance has a diversified presence in a number of sectors including consumer finance, insurance, housing finance, stockbroking and distribution.

But payment services is a highly competitive area, as even Amazon knows. India’s Economic Times reports that the e-commerce giant recently invested INR3.5 billion (about US$41million) into its digital payments arm, Amazon Pay India, through a rights issue. This capital injection is the latest in a series of investments by the company.

It comes as Amazon seeks to bolster its presence in an area dominated by PhonePe and Google Pay. Data from the National Payments Corporation of India (NPCI) suggests that in March Amazon Pay slipped to eighth position in India’s unified payments interface (UPI) transaction volume rankings as of March 2025, down from sixth place a year earlier. NPCI data also shows that PhonePe and Google Pay together command roughly 85 per cent of UPI transaction volume, while Amazon Pay apparently holds a modest 0.6 per cent market share.

Amazon Pay secured a Payment Aggregator (PA) licence from the Reserve Bank of India, in February 2024. It already had approval for a Prepaid Payments Instrument (PPI) licence.

Amazon Pay India currently offers a wide range of services including UPI transactions, bill payments, and insurance premium payments. It has also engaged in a number of partnerships that have extended its reach into movie and travel ticketing and wealth management.