Amazon Pay Seeks to Expand into Credit and Small Towns

More than two-thirds of Amazon Pay’s transactions across UPI , wallet and credit now happen outside the Amazon ecosystem, and over 75% of its users come from Tier 2 and Tier 3 cities, CEO Vikas Bansal said. The company now wants to recasts itself as a broad financial platform and place its next bet on credit with a focus on small towns, he added. The shift is not recent, he said, but the perception that Amazon Pay is mainly a way to check out on Amazon has stuck, and the company now wants to educate consumers otherwise. Amazon Pay is live with more than 10,000 online and offline merchants. “We’re playing more in the large merchant space today. We haven’t yet focused on going to smaller merchants,” he added. From the start, the aim was to be a financial platform offering credit, insurance and savings alongside payments, Bansal said. Consumers appear ready for that. Three in four urban Indians now use a financial feature inside their payment app, and 52% would prefer a single app for payments, investment , insurance and credit, according to How Urban India Pays 2026, a survey of 5,149 consumers across 100 cities by Pahlé India Foundation and Amazon Pay, launched on Tuesday. Credit is where the company is pushing hardest. Some 64% of urban Indians have never applied for digital credit through an app, and while 88% are aware of credit products, only 31% use them, the report found. That is the gap Bansal wants to close. “Can I go and serve these customers that are not served today,” he added. The barrier is trust. Consumers rate their payment app 3.98 out of 5 for making payments but only 3.10 for borrowing, and 51.5% said they would borrow through their app if fraud protection were guaranteed, the report found. Winning that trust comes down to three things, Bansal said: borrowers understanding the terms in their own language; getting what they were shown; and easy grievance redressal. “The effort will be on educating the users more proactively,” he added. Amazon Pay does not use on-ground sales staff, as agents can mis-sell and are expensive, Bansal said. The company would rather pass the savings to consumers as lower interest rates, insurance premiums and fees, he added. Gig workers show the strongest appetite for credit, the report found. 23% of the surveyed workers turn first to a loan app in a cash crunch, 3.4 times the overall rate, and 43% say digital credit makes them feel more financially independent. For such riskier borrowers, pricing has to be proportional to risk but still far below the 200-300% charged by informal lenders, Bansal said. The company’s Pay Later offering is powered by Axio, the Bengaluru-based lender which it acquired last year. Axio had a loan book of about Rs 2,200 crore when the deal closed. Bansal did not say where the book stands now, but said EMI users and transactions doubled by volume during the initial days of the festive sale compared with the last one,. “My aim is to double this every year,” he added. The report found that consumer appetite for festive spending remained high. A majority of consumers in the survey planned to spend 1.5 to two times, and some three to four times, more this festive season than last year, and Amazon Pay’s own adoption is corroborating that, Bansal said. The company is also doubling down on Smart Wallet, which uses AI to suggest the right payment option for each purchase. For instance, it will nudge a user to pay in 3 installments for a suitable buy, as it is interest-free and does not touch the bank account, or through the wallet or UPI for a Rs 50-100 coffee, or a credit card for something in between, he added. It sits as a separate store within the Amazon app.