- Payment cards are the second most popular payment method with a share of 25.7% with credit and charge being the preferred card types accounting for a 15.4% share in 2023.
- E-commerce payments are forecast to grow at a CAGR of 22.4 per cent between 2023 and 2027 to reach Rs21.8tr in 2027.
Alternative payment methods such as mobile and digital wallets have completely displaced cash and cards in the e-commerce space in India.
According to data analytics company GlobalData, mobile and digital wallets constitute 58.1 per cent market share in 2023, driven by the rising internet and smartphone penetration, discounts, faster delivery options offered by online retailers, and the growing consumer preference for online shopping.
India’s e-commerce market value is set to increase at a compound annual growth rate (CAGR) of 28.2 per cent from Rs2.8 trillion ($33.9 billion) in 2018 to Rs9.7 trillion ($117.3 billion) in 2023.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, said that alternative payments have gained huge traction in India since the demonetisation in 2016.
Government initiatives
“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.”
The Indian government also launched initiatives such as Startup India and Digital India, which also contributed to overall ecommerce growth.
As a result, e-commerce payments in India are forecast to grow at a CAGR of 22.4 per cent between 2023 and 2027 to reach Rs21.8 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 per cent with credit and charge being the preferred card types accounting for a 15.4 per cent 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 per cent share.
“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 said.