What are the most important challenges for e-commerce and e-payments in India currently?
Firstly, India is predominantly a cash-based economy. The low uptake of credit and debit cards, as well as alternative payment methods, is partly due to a cultural reliance on cash, and is compounded by an underdeveloped digital payment infrastructure. This means that even consumers who are willing to make digital purchases do not always have the means to do so, despite the rapid advances in this field. Even popular payment solutions such as UPI are more dominant in person-to-person (P2P) rather than person-to-merchant (P2M) transactions.
Secondly, how businesses use personal data and, in particular, the consequences of data breaches, are high on the political agenda, with a new bill likely to be tabled in parliament soon. However, most e-commerce firms have not developed actionable roadmaps to manage this. Fraudulent transactions are one of the key problems hampering further growth of the e-commerce sector today. Since the shift to digital in India is fairly recent, and accelerated suddenly due to COVID-19, consumer education about staying safe online is still lacking.
However, these challenges can be mitigated by working with a verified payments partner with extensive local expertise, such as PayU. Such partners can tailor payment technologies to the needs of the local population, as well as enhance the shopping experience and increase security against fraud for consumers. This is essential for any merchant looking to expand in India.
What are three opportunities for Indian e-commerce and e-payments looking ahead?
The potential for omnichannel solutions – convergence of offline and online payment solutions – is vast. Essentially, it enables the consumer to move smoothly between digital and physical payments with solutions such as UPI, QR codes and payment links. The advances in payment solutions allow e-commerce firms to create multiple touchpoints and access a wider range of customers.
There is huge scope for digitizing the end-to-end value chain, for SMEs as well as enterprise-scale businesses. It is imperative to create infrastructure which helps to solve merchants’ problems, such as augmenting sales and connecting them to digitally enabled consumers. This will add value for merchants and help to propel e-commerce growth.
The shift from traditional cash to e-payments will occur along a continuum, which will also include middle-of-the-road “phygital” (physical plus digital) solutions.
If you could give one piece of advice to emerging e-commerce leaders considering expanding to India, what would it be?
To invest in robust physical and digital infrastructure. For optimum customer experiences, this should encompass logistics infrastructure, digital payment and lending capabilities, scalable networks, and a privacy and data protection framework. The importance of strong core operational processes cannot be understated in a large market like India, with significant urban and rural opportunities to be tapped.