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If India is to fulfill its incredible potential, payments are going to be pivotal. Nowhere is this more evident than in the emerging battle for e-commerce in a country where millions are as yet still not online.


India’s e-commerce sector holds arguably more potential than that of any other country as millions of people come online over the next 15 years. Whether broadband infrastructure, Facebook’s initiative or Google Loon, there is a lot of work being done to connect hundreds of millions of Indians to the internet.

Naturally, this is a massive boon for e-commerce players. As the Economist notes, e-commerce sales in India are worth around $16 billion, but by 2020 this could be seven times larger, according Morgan Stanley.

There is a huge opportunity and India can look to China for inspiration. Between 2010 and 2014, e-commerce sales in China rose by nearly 600 percent and it’s now the single largest market in the world for online retail – larger than the US.

But it won’t be easy for India. It’s a long way behind where China was. True, there are more smartphones today than a few years ago, but iPhones alone won’t make for a thriving e-commerce sector.


To drive the e-commerce market, we need a lot more than internet connectivity. Payments will be crucial and India is playing catch-up.

According to MasterCard data, cash accounts for 98 percent of all consumer transactions. Even in the e-commerce market, cash is used heavily, as just eight percent of the population owns a debit card. Cash on delivery is hardly going to satisfy a truly modern, dynamic e-commerce market.

For the e-commerce sector to thrive, there is going to need to be more ways to pay than just cash. Partly it’s up to consumers to let go of paper money, but more than anything it’s a matter of financial inclusion and ensuring people have access to different payment channels.

Up until very recently, only around 35 percent of Indians had access to a formal bank account, according to recent data from the World Bank. Of those who do have an account, 43 percent made no deposits or withdrawals in the past year. Inertia and a general lack of willingness to let go of cash is clearly a factor.

But that still leaves hundreds of millions of consumers with no account and therefore no credit or debit card.

Financial inclusion

India has done much to boost financial inclusion. The government has launched a drive to ensure everyone has access to a formal account; boosting the number of accounts by millions. There are new efforts to boost ATM numbers and regulations around mobile money schemes are being loosened. Another recent suggestion is to introduce full account number portability.

In fact, the Indian government says its drive to open accounts mean 99 percent of households have an account.

The problem is that opening an account is merely the start of the process of offering the kind of financial services demanded, such as credit cards, internet banking, or even just access to an ATM. Financial inclusion doesn’t stop at opening an account. Even payments, which are vital for e-commerce success, are only part of the puzzle.

In particular, there are problems delivering state benefits to accounts, which is a key piece of the jigsaw. A scheme to link accounts with individuals’ unique Aadhaar ID number has only reached half of the new accounts, while around a third have a balance of zero.

If you’re still being paid in cash and few merchants accept cards, why bother with the account?

Challenges aside, we can expect things to get better in the coming years. Market forces, such as the rise of e-commerce and pressure from consumers, will mean it’s just a matter of time before India is on a par with more developed markets in the payments space.

The Reserve Bank of India (RBI) announced the “Payment System Innovation Awards” in December 2015, with the aim of boosting innovation in five areas: payment security (including fraud prevention); customer convenience and cost reduction; mobile payments; acceptance/ electronic payment infrastructure; and the use of emerging technologies for payments.

Progress is needed on all of these fronts, but it’s coming. The rising e-commerce market demands it.

Mervin Amos serves as Solutions Manager at NCR Corporation.  Mervin has a long history of working in the card payments industry, having worked for many years at AST on the UM20 product, then at S2 Systems in Dallas, then joining Alaric, an NCR business, as the architect for the Authentic product.




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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.