More than seventy-five percent of Amazon Pay users now reside outside India's major cities, and an increasing number of them are using the app to obtain loans. During Amazon's Great Indian Festival sale, installment transactions without extra charges in tier-three cities grew four times faster than in metropolitan areas, according to Vikas Bansal, CEO of Amazon Pay India.
Over the next three years, Bansal plans to expand Amazon Pay beyond payments to include credit and insurance services. He posed the questions: 'Can I provide insurance to every Indian? Can I give a loan to every Indian?'
This push comes as Amazon Pay India's net loss increased by about a third, reaching ₹1,149 crore in fiscal year 26. Bansal declined to disclose when the division will reach break-even or what the size of its credit portfolio is. He noted that his priority is customer acquisition and improving the division's economic performance.
Thanks to its digital model, which does not require physical presence in different locations, the company maintains low costs. Furthermore, last year, Amazon acquired Axio, formerly known as Capital Float, for an estimated $200 million after approval from the Reserve Bank of India (RBI). This deal, which Amazon called one of the largest in India, led to full ownership of a partnership that had existed for over six years within Amazon Pay's Buy Now Pay Later services.
Bansal stated that the acquisition of Axio was aimed at deepening the company's presence in second, third, and fourth-tier cities, reducing the cost of borrowing, and expanding distribution. He asked, 'Can we double, triple our customer acquisition compared to today?' While he declined to disclose lending revenue or profit data.
The Amazon festival sale, running from October 8th to Bhai Dooj on November 11th, attracted over 3.93 billion visits, about 70 percent of which came from regions outside megacities. Sales volume grew by more than 50 percent compared to the previous year. Customers purchased premium phones and large televisions despite rising prices due to more expensive memory chips and the weakening rupee.
Easy access to credit played a role. EMI expenses grew by 40% year-over-year (Y-o-Y) and accounted for half of the spending on mobile phones, televisions, and home appliances. No-interest installments made up 90% of all EMI expenses and were chosen 25% more often than last year. Within Amazon Pay Later, EMI expenses doubled year-over-year, and disbursements grew by 30%.
The number of Amazon Pay UPI customers increased by 40%, and transactions by almost 50%; two out of five customers chose UPI. Amazon Pay Balance customers more than doubled, and transactions grew nearly 2.5 times. Users of the Amazon Pay ICICI Bank Credit Card grew by 25% year-over-year, and repayment tenures of 12 months or more tripled.
According to the How Urban India Pays Report 2026 by Amazon Pay and Pahlé India Foundation, urban Indians make daily digital payments but have limited trust in digital lending. Although 88% of consumers are aware of digital credit, only 31% use it. UPI leads in five out of six spending categories, and 75% of respondents used a financial product through their payment application. The survey covered 5,149 consumers and 1,054 merchants in 100 cities across 20 states.
The report shows that consumers generally trust their payment applications, rating them 4.11 out of 5 for security and 3.98 for payments. However, this trust drops to 3.10 when the same application offers credit. This gap can be bridged: 51.5% of consumers stated they would take a loan through their app if fraud protection was guaranteed, compared to 16.7% who would refuse.
Bansal emphasized that trust is one of the biggest hurdles. Consumers worry about whether they understand the terms, whether what they see matches what they receive, and about fraud. He noted that digital lending has not yet gained the trust that digital payments have, and it requires more robust consumer protection and dispute resolution mechanisms.
After Diwali, under new rules from the National Payments Corporation of India (NPCI) and the Ministry of Finance, a merchant discount rate of 0.4 percent applies to certain person-to-merchant transactions via UPI exceeding ₹2,000. Bansal stated that the industry has long sought such a framework so that payment firms and banks can invest in new technologies while helping merchants move away from cash.
Bansal also expects that artificial intelligence (AI) will allow financial services to be tailored to individual customer needs rather than broad segments and help build trust. Regarding liability, he said companies will remain responsible for actions within their control. 'I don't think the rules of the game will change as much as how our delivery method changes.'
Bansal, who worked in credit business at Visa and Amex, noted that the biggest difference in India is the scale of unmet need. 'Digital credit remains very low, insurance is very, very low, in single digits. The size and scale of opportunities are huge.'
