Over the last five years, alternative payment solutions like Amazon Pay, Google Pay, and Paytm have consistently risen in popularity among Indian consumers
Bengaluru: With a market-share of about 58%, alternative payment methods such as mobile and digital wallets have displaced cash and cards as the most popular online payment in 2023, according to data and analytics company GlobalData.
The report reveals that India’s e-commerce market value is set to increase at a compound annual growth rate (CAGR) of 28.2% to Rs 9.7 trillion ($117.3 billion) in 2023, up from from Rs 2.8 trillion ($33.9 billion) in 2018. The report said the growth will be driven by the rising internet and smartphone penetration, discounts, faster delivery options offered by online retailers, and the growing consumer preference for online shopping.
“Alternative payments have gained huge traction in India since the demonetization in 2016,” said Ravi Sharma, lead banking and payments analyst at GlobalData, a data and analytics company. “The pandemic has accelerated this trend as both consumers and merchants preferred digital payments to avoid exposing themselves to disease vectors such as cash. The growing popularity of alternative payment brands among consumers and merchants also supported this trend.”
Alternative payment solutions consistently gained popularity among the Indian consumers in the last five years with some of the popular brands being Amazon Pay, Google Pay, and Paytm.
The Indian government also launched initiatives such as Startup India and Digital India, which also contributed to overall ecommerce growth. In addition, the Covid-19 pandemic also accelerated the shift to online shopping as wary consumers stayed home to avoid potential disease vectors. This trend has persisted even after the reopening of physical stores. As a result, e-commerce payments in India are forecast to grow at a CAGR of 22.4% between 2023 and 2027 to reach Rs 21.8 trillion ($263.6 billion) in 2027.
Payment cards are the second most popular e-commerce payment method in India with a share of 25.7% with credit and charge being the preferred card types accounting for a 15.4% share in 2023.
Cash, which is widely used for in-store retail payments in India, has seen a significant drop in the market share for online purchases, accounting for only 6.2% share, the study says.
“The uptrend in e-commerce sales in India is likely to continue over the next few years supported by the growing consumer preference, improving payment infrastructure, and growing popularity of alternative payment solutions with these solutions dominating the ecommerce payment space over the next few years,” Sharma added.
