Online payment mechanism must gather momentum in sync with retail e-commerce evolution

~India Retail Forum 2015 emphasizes the significance of online transactions to boost e-commerce~
Mumbai, 15th September, 2015: While the e-commerce is revolutionising the retail movement in the country, the payment mechanism is still in the stage of evolution.
Speaking at the India Retail Forum 2015, Sanjiv Gupta, Chairman & Managing Director, GETIT Infoservices- Askme.com and Askmebazaar.com said, “Online retail is now available extensively with a relatively cheap cost structure and in China people shop on we chat all the time as it is becoming a social experience. Moreover, online payment revolution is here to stay with more and more people using mobile wallet these days and the biggest retail ecosystems of the next decade are being built online.”
However, currently 10% of buyers drop out due to length check flow while 29% drop out due to mandatory registration process leading to lower payment conversion rate, said Srinivas Rao, General Manager and Director, Amazon India Payments.
But with the rising internet connections, the increase penetration of smart phones is expected to boost the mobile shopping e-commerce segment by 150% CAGR by 2016 after having grown by 800% in 2013 over the previous year, Rao said.
In India, gross merchandise value in online shopping is estimated to grow to over four times at $8.5 billion in 2016 from $2 billion in 2013.
This will be substantiated by a rise in population with internet access to 54% by 2018 from 15% now that will double the online shoppers to 40 million by 2016 from 20 million in 2013.
“These online transactions will be enabled by payment service providers and gateway companies that will grow proportionately to the growth of the internet industry in India. Digital payment for e-commerce will outpace growth in e-commerce industry as the proportion of cash on delivery payments reduces over time,” said Yatin Singh, Associate Director – Investing Banking at Motilal Oswal Investment Advisors, who was also part of the panel discussion.
According to Motilal Oswal report, domestic payment flows in India were digitised to the extent of 66% in 2014 while 10% were cheques and the balance in cash. These payments are flowing between three broad segment including consumers (also includes small and medium enterprises), businesses and the government.
“Consumer payment flows digitised in India stands at 24% compared to more than 50% across other major economies. An estimated 7% were by way of cheque and 69% in cash. Consumer or retail payments are at 14% of overall payment flow and the digitisation of consumer payments in India is a large business opportunity,” Singh said.
According to the report, there are Rs. 14 trillion in currency notes in circulation as of March 2015 which is 11% of India’s nominal GDP. This is higher than 7.5% in US or 3.8% in UK.