India’s online shopping sector is currently worth 44 billion, expected to grow by 26.5 % annually

India’s e-commerce market is rapidly growing and there is considerable room for development. From access to the internet to innovation in its online payment methods. India and the e-commerce players are expanding investment in the industry’s underlying infrastructure. 

India is the country with the highest e-commerce growth forecast. With a forecasted growth rate of 26.5% annually. In recent years, India’s online shopping sector has consistently grown at double digit rates. It is currently worth 44 billion. Over the next three years, the RBI expects more than 200 million new users to adopt digital payments with the average annual transactions per capita rising tenfold from 22 to 220.

The following are the payment methods most Indians use.

UPI

Online Payments in India is all about UPI, the government-sponsored National Payments Corporation of India’s “Unified Payment Interface,” which provides a consistent approach to fast, secure and cheap payments across over 150 banks and practically all of the eWallets in India. 

After UPI 2.0 was launched in 2018, the use of UPI has grown at an astounding 700% from 2018-2019 and 140% from 2019-2020. UPI has since become the foundation of ewallet growth stories like Google Pay, WhatsApp Pay, and Flipkart’s PhonePe. Even the long time leader in India, Paytm, began to accept the UPI standard along with its proprietary format. 

This has resulted in UPI acceptance across both bank transfers and eWallets  being very high. It has also resulted in consumers being well educated on the user experience and they now expect the transparency, instant money movement and consistency of UPI transactions. 

eWallets 

In India the use of eWallets is growing rapidly, with an expected compound annual growth rate of 80%. eWallets are on their way to becoming the dominant online payment method. Therefore, they should be a part of any e-commerce or mobile-commerce checkout experience. 

Not only do eWallets in India have simple payments, they also have eWallets that have now become “super apps,” which engage users throughout the day using different features.  

• Paytm: The Paytm app lets Indian consumers purchase a variety of goods, it also lets them book travel and event tickets, invest, and pay their bills. Currently, Paytm is the most popular online payment method in India (with 20.3% of online shoppers ranking it as their favourite way to pay)

• Google Pay and Amazon Pay: These international entrants built natively for India on top of UPI and partnerships. Google Pay is ranked as their favourite payment method by 19% of online shoppers in India. 

• PhonePe: PhonePe is a one-stop cashless and central platform where Indian consumers can shop, pay bills, and transfer funds. 

• Airtel Money: The Airtel Money app has a broad spectrum of financial features, it allows consumers to shop online, access banking services and purchase insurance, among other options. 

Debit/Credit Cards 

All the banks in India provide a debit card which customers can use for online payments. Consumers with good salaries or businesses are also provided with credit cards. Both types of cards can be used for online and offline payments. 

Debit cards have become a more popular mode of payment. This is because some e-commerce platforms offer their customers shopping points or discounts if they shop with debit/credit cards. 

Bank Transfers

India’s online banking transfers have long been a mature system. There is “Netbanking,” which allows users to authenticate to their bank to approve an online transaction, to IMPS, India’s instant transfer network, or to the more traditional NEFT and RTGS. There is a wide range of bank transfer options in India in addition to UPI. As penetration of bank accounts increases, transfer rates will continue to rise, particularly for higher value transactions.  

Cash 

Many buyers have a low level of trust for online sellers. That is why cash, or in particular cash-on-delivery, remains a crucial online payment method in India.  Cash has reentered the economy in a big way, after a brief spurt of government led “demonetization.” However, the growth of UPI, eWallets and card readers for “payment on delivery” may eventually cut cash’s hold on buyer’s trust.

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