Around 30% to 40% of customers of the bank spend on ecommerce through credit and debit cards, according to Parag Rao, senior executive vicepresident and business head (card payment products and merchant acquiring services) at HDFC Bank, indiatimes.com reports.
Rao said that the bank will not be selling goods directly as the rules do not permit it because it tied up with partners in travel, bill payment, grocery, hotel and shopping who have their websites. The bank, based on customer feedback from 2014, has been working to launch SmartBuy, which will provide a platform to its customers to get better discounts and facilities at one place.
E-commerce spends grew at a compounded annual growth rate of 34% between 2009 and 2014 to touch USD16.4 billion, according to a PwC India report. The sector is expected to expand to $22 billion by the end of this year. The Reserve Bank of India, taking note of the growing importance of ecommerce companies, had asked banks to form joint ventures with them or appoint them as business correspondents.
The central banks move to licence niche payment banks has also led to increased focus among banks on digital banking. The increase in e-tailing is not of interest to banks as these transactions are to be executed through their website so that they get the fee income, according to Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services. The banks are just gearing up for payments banks. Banks like ICICI BankBSE has 1.88 %, HDFC Bank and Axis BankBSE 1.33 %, and want to ensure their transactions are not routed to any third-party website.
The bank is also in the process of launching a new wallet facility on mobile phones that will allow customers to store their virtual credit and debit cards to perform transactions.
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