AMAZON.COM is looking to acquire Indian fintech startup FREECHARGE from under its parent company, Snapdeal, a deal reportedly worth US$50 million to US$80 million, as reported by Bloomberg.
The e-commerce giant has been shoring up its capabilities to process digital payments to take on the various homegrown e-commerce platforms all over India, such as Paytm Ecommerce Pvt. and Flipkart Online Services Pvt., who have the added benefit of being household names among India’s loyal customer base.
Amazon is entering its fifth year of operation in one of the world’s fastest growing economies, but perhaps, more importantly, one of the most technologically-savvy populations in the world. India’s one-billlion strong population lags behind only to China in terms of e-commerce potential and Amazon wants to capitalize on that fact in order to build its influence beyond the United States.
Digital payment platforms have become an integral ingredient for e-commerce platform operators to consider, as it has become one of the biggest sources of revenue for companies as well as a measure to boost user experience and thus differentiate themselves from their rivals.
Other service operators such as Grab and Apple have been working on their own proprietary payments platforms as both a user hygiene matter and a digital product that could be retailed to other businesses.
Amazon is currently working with Reserve Bank of India to operate a digital wallet, but its partnership with FreeCharge could help them move into point-of-sale services. Amazon is evidently getting serious about digital payments: last year, the firm hired former Citibank executive Sriraman Jagannathan to lead the company’s digital payments division in India, while also investing US$20 million.
Amazon will have to deal with some serious competition though, as Snapdeal’s parent company, Jasper Infotech Pvt., is also in talks with other parties including Axis Bank Ltd. and Paytm Payments, a source told Bloomberg.