Under pressure following the launch of Amazon Marketplace in India last month, Flipkart — the country’s top domestic e-commerce firm — has announced its own online payments solution that is available for merchants in India.

The company says PayZippy can handle card payments for domestic merchant websites and mobile sites, and has been “rigorously tested” on Flipkart.com. It says the solution is payment card industry data security standard (PCI DSS) certified and covered by a fraud detection system.

The company began selling electronics, but has since expanded its catalog to include 17 different product categories. It is valued at more than $1 billion, after South African investor firm Naspers recently confirmed it bought a 10 percent share for $102 million back in August 2012.

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Flipkart says it has used its experience selling items to understand and address the pain points that India-based Web retailers face when its comes to online transactions. Interestingly, the company says that this launch is the first phase of its payments push, and a Wallet-like product for Internet users will come soon.

From the announcement:

This launch is a pre-cursor for a larger customer-centric product that will be geared towards making online payments a smooth, trustworthy and convenient experience for consumers across online merchants. With that product, consumers will be able to save their card details in their PayZippy account. They will then be able to use this saved card for transactions on merchant websites without having to type or share sensitive card details.

It isn’t clear exactly how Amazon’s Marketplace site — which recently began selling phones and cameras — is faring, but already Flipkart is making broad changes to its business as it looks to extend its position from merely a Web retailer, to a Web retail enabler.

The company announced plans to switch to a marketplace model itself in April, perhaps aware of Amazon’s plans, and now it is battling to expand its empire while Amazon is limited to indirect sales in India; due to regulation that prevents foreign-owned firms from selling direct to consumers online.

eBay is also targeting India — having invested in Flipkart rival Snapdeal — but regulations, for now, leave Flipkart in a better position than its two US-headquartered rivals.

Flipkart is aiming to partner with at least 2,000 merchants for PayZippy by March 2014.

Headline image via smrtmazumdar/ Flickr