Growth of E-Commerce and Alternative Payments in India

According to an analysis of GlobalData’s E-Commerce Analytics, the value of India’s e-commerce market is predicted to surge at a compound annual growth rate (CAGR) of 28.2% from INR2.8trn ($33.9bn) in 2018 to INR9.7trn ($117.3bn) in 2023. The rising internet and smartphone usage, attractive discounts, swift delivery options, together with the increasing consumer inclination towards online shopping, are the key driving factors behind this growth.

Government Initiatives and Pandemic Effects

The Indian government’s initiatives such as Startup India and Digital India have further fueled the growth of e-commerce. The Covid-19 pandemic has also played a role in accelerating the shift to online shopping as consumers chose to stay home to avoid exposure to the virus. This trend has continued even with the reopening of physical stores, leading to a forecasted growth of e-commerce payments in India at a CAGR of 22.4% between 2023 and 2027, reaching INR21.8trn in 2027.

Rise of Alternative Payments

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, highlighted the significant rise in alternative payments in India since the demonetisation in 2016. This trend has been further boosted by the pandemic as both consumers and merchants opted for digital payments to minimize exposure to potential disease vectors such as cash.

Based on GlobalData’s 2023 Financial Services Consumer Survey, alternative payment solutions held a market share of 58.1% in 2023, dominating e-commerce in India. Notable brands that have gained popularity over the last five years include Amazon Pay, Google Pay, and Paytm.

Payment Cards and Cash

Payment cards are the second most popular e-commerce payment method in India, with a market share of 25.7%. Among these, credit and charge cards are the preferred types, accounting for a 15.4% share in 2023. On the other hand, cash, commonly used for in-store retail payments in India, has seen a significant decline in its market share for online purchases, accounting for just 6.2% of the market.