Digital banking, advanced biometrics, VC: main trends in Indian ecommerce

What is the current size of the Indian ecommerce market, and how do you think it will develop in the coming two years?

Currently, the ecommerce market in India is close to 200 million people and growing. It used to be a far smaller group of people that were digitally savvy, who had bank accounts and credit cards. In other words, ecommerce used to be an activity for the rich, connected and banked population. But the government started changing this four to five years ago.

Everybody talks about demonetisation as the point where everything changed, but actually it started a long time before that. The government had been planning this for a long time when they started issuing lower cost bank accounts (so-called Jan Dhan accounts) that were meant for everybody, in an effort to bank most of the unbanked population in India. When I was in Western Union before I joined Emergent Payments, I experienced that shift first-hand. The Indian government started the most audacious project at the time, taking the entire population and use biometrics to create a digital KYC (Know Your Customer) world.

It was an extremely successful project, as millions of people who were underbanked are now banked and KYC’ed. Afterwards, the government issued hundreds of millions of ‘Rupay cards’. Once those Rupay cards were distributed to those people, everyone had the ability to transact digitally. The government followed this up with the demonetisation plan, in which they said that 85% of all currency will be deemed obsolete, and there will be new currency issued. They made it clear that it was an opportunity for India to get to digitisation. This caused a huge increase of players in the payment industry.

Going forward, the government started looking at success stories abroad and in-country, like the success of Alipay in China and PayTM in India, and launched a QR code-based payment method, called Bharat QR. As a result, they launched UPI (Unified Payment Interface) in India’s payment ecosystem, a direct real-time bank transfer service that allows people to buy and transfer money from their bank accounts using their bank accounts with a much smooth customer experience, especially applicable for mobile apps.

Do you see any other popular trends in ecommerce in India we should take into account?

I see three trends that are becoming increasingly interesting; firstly, digital banking. All major payment providers in India are getting into the business of instant credit risk with a digital bank, so people can use small credit, which in turn enables consumers to buy more digitally, and allow them to have more liquidity online. The second trend is advanced biometric, KYC-driven, digital wallet adoption, powered by the Point-of-Sale adoption. The POS-adoption in India has been much faster than in the US, making mobile payments a viable option for an increasing amount of people.

Finally, the venture capital community has gotten really active in India in the past five years; companies like Flipkart or Snapdeal have grown to astronomical proportions, which gave Amazon the inspiration to bet really big on India. Now, Amazon is close to the second largest ecommerce provider in India. On top of all this, the cost of fulfilment and cost of delivery are still very low in India, which helps people to buy from their homes.

What challenges do merchants face if they are trying to tap into the opportunities of the huge market in India?

One of the challenges that I see with cross-border merchants that are trying to expand into India is to understand the Indian consumers and their buying patterns. They need to realise what they’re selling, what sector that product is in, to which segment of society are they selling, and what buying patterns that segment has. If they understand those things and can map them from end to end, they are more likely to come up with the right payment mix for their consumer.

What exact services does Emergent Payments offer to merchants expanding into India?

We go into India together with the merchant: we share all our knowledge from many years of studying and understanding the Indian market. We have been successfully operating in India for two years now, so we have massive amounts of data. We reassess the ongoing trends in the market every quarter; what is changing, what is being added, what is obsolete. We review what the merchant wants to sell, we review their target audience then we do a complete deep-dive into what would be the ideal mix of payment solutions for the merchant.

We share our collateral, as well as advice on tax issues, legal structures, and ways to collect money. On top of this, we can consult on repatriation of funds if they want to be settled outside of India, or if they want to be settled locally. We also can share our insights on end-to-end user experience, something in which we have gathered a lot of experience over the years. We have created our own platform for user experience, which a merchant can use parts of, or even adopt completely. In conclusion, we can go through the entire process of settling in India; from strategy planning, through research, to development, all the way to testing and launching, we can help our customers succeed in India.

About Abhishek Banerjee:

Abhishek Banerjee is Chief Technology Officer at Emergent Payments and has a deep background in payments and fraud prevention engineering along with Big Data and analytics for digital organizations in Silicon Valley. Before joining Emergent, he was the head of engineering for payments, fraud, and Big Data analytics for Western Union Digital venture based in San Francisco. He also led a team providing platforms for payments in over 200 countries.

About Emergent Payments:

Emergent Payments enables merchants to accept more than 200 local payment methods with one integration, making it accessible to an incredibly wide swath of the international payments market. Furthermore, the company provides the ability for merchants to manage all aspects of global payments processing including tax, fraud, settlement, and FX. Headquartered in Palo Alto, Emergent Payments has offices in North Carolina, Bangalore, Luxembourg, Kuala Lumpur, Seoul, Shanghai, Singapore, Tokyo, São Paulo, and Lagos.