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Expert opinion

Opportunities for growth: trends in Indian ecommerce

Monday 5 September 2016 | 11:01 AM CET

Sudipta Jash, PayU India: Merchants looking to sell cross-border into India can fully capitalise on the market by understanding the payments landscape

Recent figures show that ecommerce sales in India grew from USD 2.3 billion in 2012 to an estimated USD 17.5 billion in 2015. Ecommerce in India is expected to grow to USD 100 billion by 2020 and cross-border ecommerce is estimated to account for over 20-25%. With 500 million expected internet users by the end of 2016, the opportunity in the market is difficult to disregard.

Historically, global merchants have seen this opportunity but have been turned off by all of the red tape and roadblocks of cross-border transactions. However, it became a lot more appealing in late 2015 when the Reserve Bank of India began to allow the import of goods and software with a value inferior to USD 2,000 without the need for a local entity if using an Online Payment Gateway Service Provider.

With the exploding growth of ecommerce in India, international merchants looking to sell cross-border into India can fully capitalise on the market by understanding the payments landscape, consumer payment trends and new innovative products aimed to meet consumer and merchant needs.

Payment landscape

India is a very diverse market in terms of its population and cultures and the same holds true for its online payment methods. Based on PayU research, we see 45-55% of online transactions being paid by credit or debit cards. Alternative payment methods such as Netbanking transactions account for nearly 35-45%. Mobile wallet transactions and other options have been rapidly grown to 5-10%. The value of transactions carried out via mobile wallets has grown by an astounding 500% between 2014 and 2016.

As it is evident, the local Indian payment options including Netbanking and locally issued credit and debit cards such as RuPay continue to make up a large percentage of the preferred payment option for online transactions. RuPay is an Indian domestic card scheme conceived and launched by the National Payments Corporation of India in 2012. RuPay cards have grown from 17 million in 2014 to nearly 247 million by January 2016.

The payment landscape in India remains very diverse and offering local buyer preferences is imperative to capture the entire market.

Payment user trends

While there are many consumer trends in payments, the most important and bound to make the largest impact on the industry is the rapid growth of smartphone use in the country. If you walk on the street in Delhi, you will see young people using their mobile phone and many of those for shopping online. Local merchants have put a large focus on m-commerce and developing apps that can replace the need for a consumer to use the website.

In late 2015, a report by Counterpoint Research showed that India had surpassed the US in the number of smartphones, with over 220 million. While this is still just a small percentage of the population as a whole (below 30%), this shows the importance a strong mobile user experience plays now and in the future. The challenge is that nearly 70% of consumers, according to our research, want to pay via their mobile but the poor experience and constant network drops do not encourage this action. The demand is there but the mobile experience must be improved for the opportunity to be fully captured.

New innovative solutions at PayU

The mobile payment issues aforementioned present challenges and opportunities for merchants and online payment providers. By solving these issues, conversion rates and online sales will take a big leap forward.

At PayU, we have recently launched an innovative product aimed to improve the user experience on his mobile device – OTP technology (One Tap Payments). This allows mobile payments using debit or credit cards to be processed with just one simple tap by the consumer on the device screen. The technology enables the consumer to store their card data in a secure whitelabelled vault. This eliminates the necessity for the customer to repeatedly input their payment information when shopping online while also providing a secure environment for the date to be stored.

Additionally, once the customer has entered their password and CVV number there is no need to repeat the process when returning to that specific merchant’s checkout. These simple steps that streamline the customers shopping experience have shown to increase the mobile conversion rates by 25% to more than 83% conversion. The OTP technology also results in a faster process and decreases the likelihood of a network drop during the transaction. In fact, this same technology has a built-in feature that, if the network is lost during the transaction, the consumer simply has to tap the button to retry and the transaction will be processed to ensure its completion.

PayU has also recently launched a Direct Issuer Integration solution to minimise the URL redirects similarly to how PayU directly hosts the Access Control Server (ACS) page. This direct integration decreases the time each transaction takes, including the authentication and authorisation by 60%, and has led to higher conversion rates for the merchant. In addition, the direct connection allows processing of real-time refunds, while also handling settlements, chargebacks and disputes much faster.


It is clear that we are still just seeing the tip of the iceberg when discussing the potential of the ecommerce market in India. Offering local payment methods and a strong mobile solution will allow you to see high returns in this fast-growing and everevolving market.

About Sudipta Jash

Sudipta Jash is the Head of Cross Border Sales at PayU India. He has expansive work experience with over 12 years in business analysis, engagement management and process consulting. He has worked throughout the US, Europe and India.


About PayU Global

PayU Global is a leading online payment service provider dedicated to creating a fast and secure payment process for merchants and buyers. Our presence in 16 high growth markets and local focus enable us to be the experts and provide the best solutions for each market. PayU makes up the e-payments division of Naspers Ltd.

This article is part of the exclusive Ecommerce Payment Methods Report 2016, an educational overview of the global payments industry. For more insights into the latest trends in ecommerce and e-payment methods developments please download a free copy here.