Digital India: Tremendous growth! Top reasons why e-commerce and digital payments is a winning duo

COVID-19 is undoubtedly driving a significant share of the current e-commerce transactions through digital payments, preparing consumers for a permanent shift. The likely surge in ecommerce and digital payments in 2021 will be consistent across the country. While hygiene was the primary reason for adopting new payment forms, other factors like convenience, ease of use, acceptance, and incentives have given impetus to this adoption. These factors will likely continue to become the default behaviour of consumers in the long run. Rajeev Kumar K., Senior VP, Market Development, South Asia, Mastercard, shares top reasons why e-commerce and digital payments is a winning duo:-

Rajeev Kumar K. says, "In the past few years, there has been tremendous growth in India's digital payments space as consumers and merchants have experienced the convenience and safety of digital adoption. Let us look at some topline reasons why the e-commerce surge rekindled the digital payments ecosystem:

Increasing awareness in Tier II and Tier III cities: 

Over the years, the biggest challenge in the acceptance and adoption of digital payments has been the lack of awareness about its benefits in rural areas. However, the pandemic brought about a paradigm shift, and awareness and adoption in tier ii and tier iii cities have increased drastically. Not only this, India has displayed the highest surge in preference for e-commerce, amongst other top nations such as China, Brazil, Indonesia, Thailand, and the Philippines, as per a study by Facebook and Boston Consulting Group. 

Tokenization:

When e-commerce businesses use tokenization, the payment processor turns their customer data into irreversible and unique tokens. This means that if it is intercepted or hacked, the information has no inherent value. More importantly, it also cannot be used to commit fraud. This minimizes the risk of their data ever being intercepted and compromised. Businesses can minimize the cost and effort of keeping customer data by putting responsibility in the hands of payment providers.

Enabling economic boost of MSMEs:

There is enormous potential to expand the use of digital payments by MSMEs. So is the case with consumers, digital payments are often the gateway for MSMEs into formal financial services. Electronic payments allow MSMEs to establish a credit history and facilitate access to loans that bridge the financing gap. EPS also allow MSMEs to expand their customer base by selling into global markets and also opens access to international suppliers that accept payments digitally. Other benefits include security and protection against fraud and theft, easier evaluation of revenue and cost flows, access to new financial services, and the ability to use value-added services.

Promotes contactless transactions and secures the payments ecosystem:

Adopting new payment methods like contactless cards, tap-and-go, QR codes, etc. helps mitigate risks, makin digital payments simple and secure. These latest technologies facilitate advanced intelligence to assess behaviour patterns and create a layered defense against unauthorized persons to access information and avert online fraud. While 3D secure technology improves authentication for ecommerce and m-commerce environments, algorithms powered by AI/ML proactively pick up any irregularity in the payment flow and alert a bank in real-time.

The digital ecosystem, built over the years, plays a crucial role in fulfilling business transactions in today’s time. Big payment companies collaborate with new-age fintech companies to create and deploy several low-cost, easy to use, multi-purpose payments acceptance. Furthermore, digital payment volumes are also receiving a boost through the Government’s initiatives such as ‘Cashless India’ and allowing contactless transactions below INR 2000 without a PIN. In the past few years, the industry has witnessed many trends that make India the most exciting payments hotspot in the world. Therefore, it is evident that India is all set to emerge as a digitally empowered and selfreliant (Aatmanirbhar) economy."