Amazon is intensifying its battle for a stronger foothold in India's booming digital payments market with a recent investment of Rs 350 crore (approximately $41 million) in its fintech arm, Amazon Pay India. This move signals Amazon's commitment to gaining ground against dominant players like PhonePe and Google Pay, despite currently holding a modest market share.

This latest capital infusion follows previous investments of Rs 300 crore in November 2024 and Rs 600 crore in June 2024, demonstrating a sustained effort to bolster its position in the Indian digital payments landscape. Regulatory filings reveal that Amazon Pay India allotted 3.5 crore equity shares to its parent entity, Amazon Corporate Holdings Private Limited, through a rights issue.

Despite these investments, Amazon Pay's position in the Unified Payments Interface (UPI) ecosystem has weakened, slipping to eighth place in transaction volume as of March 2025, with only 0.6% market share. PhonePe and Google Pay command a combined 85% of the UPI transaction volume. This dominance highlights the intense competition in India's digital payments space, where even substantial financial backing doesn't guarantee market leadership.

Amazon Pay offers a range of services, including UPI transactions, bill payments, and insurance premium payments. Strategic partnerships with platforms like BookMyShow, MakeMyTrip, RedBus, IRCTC, and Kuvera, have expanded its reach into ticketing, travel, and wealth management.

The Indian digital payments market is experiencing rapid growth, driven by increasing smartphone usage, internet penetration, and government initiatives promoting a cashless economy. The market is projected to reach USD 42.61 billion by 2033, exhibiting a growth rate of 23.2% during 2025-2033. UPI has become the backbone of digital transactions in India, accounting for over 80% of the country's digital transactions.

Amazon secured a payment aggregator (PA) license from the Reserve Bank of India (RBI) in February 2024, enabling it to expand its merchant payments operations. This followed an earlier approval for a prepaid payments instrument (PPI) license. The PA license allows Amazon to operate as an intermediary between merchants and payment processors, accepting payments on behalf of multiple merchants and distributing the funds.

For the fiscal year ending March 2024, Amazon Pay India reported a 9.22% rise in operating revenue to Rs 2,286 crore. The company also narrowed its losses by 39%, bringing them down to Rs 911 crore.

The Payments Council of India (PCI) has urged the Prime Minister's Office to reintroduce the merchant discount rate (MDR) for UPI and RuPay debit card transactions, at least for large merchants. Amazon Pay India CEO Vikas Bansal has emphasized that reintroducing MDR is essential to ensure smaller players in the UPI ecosystem are fairly compensated for their services.

Amazon's continued investments and strategic initiatives demonstrate its long-term vision for capturing a significant share of India's expanding digital payments market. While challenges remain, Amazon is focusing on merchant payments, diversified services, and innovative solutions to strengthen its position in this competitive landscape.