Amazon Pay’s next customers are in small towns, and they want credit | Company News

Over 75 per cent of Amazon Pay customers now live outside India’s big cities, and more of them are using the app to borrow. During Amazon’s Great Indian Festival sale, no-cost EMI transactions in Tier-III cities grew four times faster compared to metros, said Vikas Bansal, chief executive  officer of Amazon Pay India. 

Over the next three years, Bansal wants to take Amazon Pay beyond payments into credit and insurance. “Can I provide insurance to every Indian? Can I give credit to every Indian?” he said in an interview. 

The push comes despite Amazon Pay India’s net loss widening by about a third to ₹1,149 crore in FY26. 

 

Bansal declined to say when the unit would break even or how big its loan book is. His immediate focus, he said, is customer adoption and improving unit economics. 

Its digital-first model, which needs no physical presence across locations, keeps costs lower, he said. 

Amazon bought Axio, formerly Capital Float, for a reported $200 million last year after Reserve Bank of India (RBI) approval. The deal, which Amazon described as one of its largest in India, turned a six-year partnership behind Amazon Pay’s Buy Now Pay Later services into full ownership. 

Bansal said Amazon acquired Axio to deepen its reach in Tier-II, -III and -IV cities, lower the cost of credit and expand distribution. “Can we double, treble our customer adoption to what it is today?” he asked. He declined to disclose lending revenue or profits.

Amazon’s festival sale, which runs from October 8 to Bhai Dooj on November 11, has attracted more than 3.93 billion customer visits, some 70 per cent from beyond the metros. Shopping volumes rose more than 50 per cent from a year earlier. Shoppers traded up to premium phones and large televisions, even as costlier memory chips and a weaker rupee raised prices. 

Easy credit helped. EMI spending grew 40 per cent year-on-year (Y-o-Y) and accounted for half of the spending on mobiles, televisions and appliances. No-cost EMI made up 90 per cent of EMI spends and was chosen by 25 per cent more customers than last year. 

On Amazon Pay Later, no-cost EMI spending doubled Y-o-Y and issuances grew 30 per cent. Three in four Pay Later purchases used EMI. 

Amazon Pay UPI customers grew 40 per cent and transactions nearly 50 per cent. Two in five customers chose UPI. 

Amazon Pay Balance customers more than doubled, and transactions rose nearly 2.5 times. Amazon Pay ICICI Bank Credit Card users grew 25 per cent Y-o-Y, and EMI tenures of 12 months and above tripled. 

Urban Indians pay digitally every day but have limited confidence in digital credit. While 88 per cent of consumers are aware of digital credit, only 31 per cent use it, according to the How Urban India Pays Report 2026 by Amazon Pay and Pahlé India Foundation. 

UPI leads in five of six spending categories, and 75 per cent of respondents have used a financial product through their payment app. The survey covered 5,149 consumers and 1,054 merchants across 100 cities in 20 states. 

The report finds that consumers broadly trust their payment apps, rating them 4.11 out of 5 for security and 3.98 for payments. But confidence drops to 3.10 when the same app offers credit. 

The gap looks addressable: 51.5 per cent of consumers said they would borrow through their app if fraud protection was guaranteed, against just 16.7 per cent who would decline it. 

Bansal said trust is one of the biggest barriers. Consumers worry whether they understand the terms, whether what they see is what they will get, and fraud. 

Digital credit has yet to build the trust digital payments have, he said, and needs stronger consumer protection and grievance redressal. 

Post Diwali, under new rules from the National Payments Corporation of India (NPCI) and the Ministry of Finance, a 0.4 per cent merchant discount rate applies to eligible person-to-merchant UPI transactions above ₹2,000. 

Bansal said the industry had long sought such a framework so payment firms and banks can invest in new technologies while helping merchants move away from cash. 

Bansal also expects artificial intelligence (AI) to tailor financial services to individual customers rather than broad segments, and to help build trust. 

On liability, he said companies would stay liable for activities within their control. “I don’t think those rules of the game will change as much as the way we deliver will change.”

 

Bansal, who built credit businesses at Visa, and Amex, said the biggest difference in India is the scale of unmet need. “Digital credit continues to be very low, insurance is very, very low, single digits. The size and scale of the opportunity is massive,” he said.