India e-commerce payments to surge by 23.8 pc in 2024: GlobalData

India's e-commerce market is poised for rapid growth, with forecasts predicting a 23.8 percent surge in 2024, according to a leading data and analytics company GlobalData.

This growth is fueled by increasing consumer preference for online shopping and robust internet penetration across the country. GlobalData's E-Commerce Analytics highlights that the value of India's e-commerce market is projected to rise from Rs 12.2 trillion (USD 147.3 billion) in 2024 to an impressive Rs 24.1 trillion (USD 292.3 billion) by 2028.

This translates to a compound annual growth rate (CAGR) of 18.7 per cent, underscoring the sector's expansion over the next few years. Ravi Sharma, Lead Banking and Payments Analyst at GlobalData said, "India's e-commerce market is growing at a healthy pace, supported by rising internet and smartphone penetration and growing consumer preference for online shopping."

The rapid increase in internet users is a significant factor propelling this growth. The Telecom Regulatory Authority of India (TRAI) reported that as of March 2024, India had 954 million internet subscribers, a sharp increase from 881 million in March 2023. This surge in connectivity is empowering small and medium enterprises (SMEs) to tap into the e-commerce space, further expanding the market.

Major e-commerce platforms such as Flipkart, Amazon, and Myntra are capitalizing on this trend by offering consumers attractive benefits, including discounts, cashback, and exclusive deals during flagship shopping events like Flipkart Big Billion Days, Amazon Great Indian Sale, and Myntra Big Fashion Festival Sale. These promotions have significantly influenced consumer behavior, leading to a shift towards online shopping.

Another key trend highlighted by GlobalData's 2023 Financial Services Consumer Survey is the growing dominance of alternative payment methods in India's e-commerce sector. In 2023, these payment solutions accounted for a remarkable 58 percent of the market share, signaling a significant shift in consumer preferences. "Alternative payment solutions have consistently gained popularity among Indian consumers in the last five years, with some of the popular brands being Amazon Pay, and Google Pay," Sharma noted.

Mobile and digital wallets have overtaken traditional payment methods, reflecting a fundamental change in how consumers conduct transactions online. Payment cards remain the second most popular method, occupying a 25.7 percent share of the e-commerce payment market, with credit and charge cards being the preferred types, holding a 15.4 percent share. In contrast, cash, which continues to dominate in-store retail payments, has seen its share in online purchases decline to just 6.2 percent.

E-commerce platforms are adapting to these changing payment dynamics by offering more convenient payment options. For example, Flipkart's QR code Pay-On-Delivery facility allows customers to complete transactions using any UPI-enabled app, such as PhonePe, Google Pay, or MobiKwik, at the time of delivery. The future of e-commerce payments in India looks promising, driven by government initiatives like "Make in India" and "Startup India," which have empowered SMEs to scale their operations and sell products through online channels.

These initiatives are expected to further boost the overall e-commerce market. Sharma stated, "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."