India's e-commerce market is poised for rapid expansion, with digital businesses undergoing exponential growth. The eCommerce market in the country is expected to witness a growth of $188 billion by 2025. The increase in smartphone users and accessibility to the internet has been a major proponent of this growth. India will potentially have over 900 million active internet users in 2025. Given this massive digital presence, more companies are going digital to reach the masses.
New-age technologies such as UPI, ePOS, and payment links have enabled users to look beyond conventional payment methods. The use of digital payment methods has been on the rise. In fact, India's digital payments market is predicted to grow three-fold and reach $10 trillion by 2026. With the increase in digital payments and smartphone usage, the growing trend of online shopping will also gain momentum.
In the last few years, conventional digital payment solutions have spurred digitization across sectors. With continued support from payment solution providers, the eCommerce industry has grown steadily, especially during the pandemic. Digital payments have indeed brought a shift in consumer behavior.
Nowadays, more individuals prefer seamless online and offline payments. As a result, the retailers are updating and improving their payment infrastructure to provide consumers with seamless shopping and payment experience. The industry is undergoing significant transformation with technological advancements to ensure digital security.
Here’s a rundown of how digital payments are driving India’s e-commerce wave:
1. Making Payments have Become Easy
Long ATM queues to withdraw cash are no more a tedious activity for anyone. eCommerce and digital payment solutions have increased convenience. It allows consumers to easily conduct financial transactions without having to worry about having enough cash in their wallets.
2. Lower Operational Cost
The digital mode of payment has a lower operational cost, which is a positive factor for business growth. Adopting digital payments in the eCommerce industry can help avoid payment transfer or cheque clearance delays. This, in turn, increases cash flow, saves time, and reduces manual effort.
3. Brands to Increase the Basket Size of the Purchase
Most traditional businesses offer a limited number of goods because they have limited space to display their products. However, eCommerce businesses have no space constraints as all their products are cataloged online. Therefore, brands can upsell and cross-sell products easily through online platforms that are supported by digital payment methods, coupon management options, and seamless checkout pages.
4. Enhanced Security
eCommerce websites are vulnerable to cybersecurity threats, such as denial-of-service (DoS) attacks, automated bots that attempt to complete transactions using stolen credit card numbers, and e-skimming attacks. However, some fintech companies provide solutions that are PCI DSS compliant. It helps in accepting payments from clients and securely processing all transactions.
Interweaving Industries with New Opportunities
Generating a broad spectrum of new opportunities, digitization has also given a thrust to interweave industries. By adopting fast-evolving technologies, the fintech sector has swiftly made its way into the dynamic market. It has empowered multiple businesses by reducing traditional barriers to offline or cash transactions. Quite a few fintech companies have emboldened the eCommerce industry by helping them streamline their operations, reduce costs, and improve customer service.
Meanwhile, the innovative e-payment in the banking sector has allowed more customers to use credit and debit cards and other digital payments. It has also allowed customers to pay shopping bills with e-payment solutions.
The Rise in Digital Payments across eCommerce Platforms
With digital payments, people don’t need cash or cheques to carry out transactions. It has spurred the use of contactless payments, debit cards, credit cards, and mobile wallets on eCommerce platforms. Gradually, eCommerce supported by electronic payments is gaining popularity.
Let’s look at some of the popular payment methods powering the eCommerce industry:
Credit cards are the most popular payment method for eCommerce transactions. Customers can easily enter their card details on the web page. Enhanced security measures, such as the card verification value (CVV), assist in preventing fraud by comparing the CVV number to the card number. Most importantly, the amounts that the buyer spends are billed, and payments are made at the end of the billing period.
2. Debit Card
Debit cards are another popular eCommerce payment method in India. It allows customers to pay for goods and services with the money in their bank accounts. Those who prefer to pay within financial limits usually prefer debit cards.
Similar to debit cards, net banking allows paying for online purchases with money already in the bank. To use net banking, a user has to register with the concerned bank to activate the facility. For this payment method, users don’t need their cards to make payments.
UPI has accelerated India's shift to e-payments, particularly for money transfers between individuals. According to recent reports, India had 9.36 billion transactions totaling Rs 10.2 trillion in the first quarter of 2022. As every transaction is documented and recorded, the likelihood of cash loss and other fraudulent activity is decreased.
E-wallets allow customers to store credit cards, debit cards, and account numbers safely. It eliminates the need to key in account information every time while making payments. Once the customer has registered and created a profile, he can make payments from anywhere.
The Bottom Line
Digital payment methods provide users with a hassle-free shopping experience. It has led to unprecedented growth of eCommerce across the country. However, the increase in digital payments has also given rise to cyber security threats. Therefore, it is crucial to choose a reliable eCommerce payment gateway for safe transactions and enhanced customer engagement.