A fintech battle in India could transform retail after the coronavirus pandemic

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Amazon, Walmart and Facebook are using point of sale credit, deliveries and in-app payments to outflank Paytm in India, honing services that they see as vital to shaping the global economy's recovery.

In a flurry of rollouts and deals, Amazon and Facebook are both stepping up their pace in India. On Wednesday Amazon launched Pay Later, which offers instant credit, zero interest and payments over 12 months for purchases of up to about $800. At nearly the same time, Facebook's WhatsApp began testing an ordering system through JioMart. Users in a handful of Indian cities can initiate a supermarket shopping site via text. The feature does not have a “pay” button yet but there is a digital invoicing function.

The WhatsApp ordering system is the first of what will likely be many e-commerce, retail and payment projects to come out of Facebook’s $5.7 billion 10% stake in Reliance Industry’s digital business in India. The stake covers myriad business lines, most notably Jio Platforms, which distributes news, movies and music.

JioMart is Jio Platforms’ foray into general retail, while WhatsApp is Facebook’s portal to its payments business in India — and part of its broader blockchain strategy that includes its Libra cryptocurrency project and other initiatives.

Facebook and Amazon are up against Walmart in India, as they are in much of the world. Walmart has been dueling Amazon in India for years, including entering a bidding war over Flipkart that resulted in Walmart paying $15 billion for the Indian e-commerce company. Flipkart offers point of sale credit, putting it in direct competition with Amazon’s Pay Later. Flipkart also operates the PhonePe mobile payments app, creating competition for Amazon Pay and WhatsApp’s payment apps in India.

“The expansion of payments in Facebook via WhatsApp is consistent with their strategy to advance payment capabilities in India, however they are still in beta with a lot of hurdles to clear,” said Krista Tedder, head of payments for Javelin Strategy & Research. “The benefits are more for Reliance to begin competing with Amazon Pay and Walmart’s PhonePe for in-app purchases via WhatsApp, and are focused on small business.”

Starting in micro-services such as grocery deliveries should help facilitate consistent usage and potentially help the Indian market during the coronavirus, Tedder said.

All three American companies are competing with the Softbank-backed Paytm, which has the advantage of being a more local company, thus making it easier to comply with India’s strict local data storage rules.

Installment payments and supermarket innovations are a key to establishing a foothold in India, which has been on lockdown for several weeks to mitigate the spread of the coronavirus. That’s also the case for most other countries, where an economic downturn has drawn attention to streamlined credit options and ways to shop and pay with less contact.

That makes Facebook, Amazon and Walmart’s moves in India a blueprint for what these firms will do to push recoveries in other markets. Point of sale credit firms such as Klarna and Splitit are planning expansions, and payment companies are planning to use lessons from the spike in supermarket volume to inform strategies at other merchants.

“Given the virus and recovery strategies for businesses and consumers, features such as point of sale credit and mobile order and pay aren’t coming in a vacuum,” Tedder said. “While Amazon, Walmart and Facebook are deploying these strategies to maneuver in India, there will likely be demand for these features in other markets.”

The coronavirus has brought a digital spin to a very old store credit concept, according to Richard Crone, a payments consultant, adding store credit is being applied to digital point of sale credit apps.

“It’s safer because people are seeking out merchants virtually for almost everything now,” Crone said. “There’s an opportunity for private-label order-ahead tied to point of sale credit.”

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Coronavirus Fintech Retailers Amazon Walmart India Facebook