The Reserve Bank of India (RBI) has slapped a penalty of INR 3.07 Cr on ecommerce giant Amazon’s payment arm, Amazon Pay, for flouting prepaid payment instruments (PPIs) norms and know your customer (KYC) directions.

“The Reserve Bank of India (RBI) has imposed monetary penalty of ₹3,06,66,000/ on Amazon Pay (India) Private Limited (the entity) for non-compliance with certain provisions of the Master Directions on Prepaid Payment Instruments (PPIs) dated August 27, 2021 and the Master Direction – Know Your Customer (KYC) Direction, 2016 dated February 25, 2016,” the central bank said in a statement.

The RBI said that it issued a show cause notice to Amazon Pay asking why a penalty should not be imposed on it for non-compliance with its directions. After considering the entity’s response, the central bank said it concluded that charges of non-compliance were substantiated and warranted imposition of monetary penalty.

PPIs are instruments that facilitate purchase of goods and services, conduct of financial services, enable remittance facilities, among others, against the value stored therein.

The penalty has been imposed in exercise of powers vested in RBI under Section 30 of the Payment and Settlement Systems Act, 2007.

“We remain deeply committed to operating as per regulatory guidelines and maintaining a high compliance bar, while we innovate on behalf of our customers to offer them a safe and convenient payments experience. We continue to work closely with the authorities to share our commitment with them,” an Amazon spokesperson said.

Amazon Pay UPI competes against the likes of PhonePe, Google Pay, Mobikwik, and Paytm, among others, in the Indian digital payments market.

While PhonePe, Google Pay and Paytm, in this order, accounted for the highest share of UPI market in India in 2022, Amazon Pay processed transactions worth INR 73.45 Cr out of the transactions worth INR 12.82 Lakh Cr processed during the year.

Recently, Amazon Pay also received in-principle authorisation from the RBI to operate as an online payment aggregator.

Amazon Pay also offers other services such as Amazon Pay Later, Amazon Pay for businesses, among others.

The latest development adds to the regulatory troubles of Amazon in India. The Competition Commission of India (CCI) is probing the ecommerce giant for its bias against certain sellers on the platform. Last year, the competition watchdog raided Amazon India’s two top sellers, Cloudtail and Appario, for alleged violation of the competition laws.

Last year, it shut down several verticals such as edtech and food delivery in India. Besides, Amazon Pharmacy was among the 20 epharmacies that received show cause notices from the Drug Controller General of India (DCGI) for selling and distributing drugs in contravention of provisions of the Drugs and Cosmetics Act, 1940.

Despite the troubles, the US-based company recently said that although it would take time to become profitable in India, it is on the right trajectory in the market. Last month, Amazon also said that it would integrate its SmartCommerce services and logistics network with the Open Network for Digital Commerce (ONDC).