E-commerce Payments Trends
E-commerce Payments Trends: India
India e-commerce insights
Rapid growth is on the horizon for India’s e-commerce market. There is considerable room for development – from basic access to the internet to innovation in its online payment methods but both the state and e-commerce players are ramping up investment in the industry’s underlying infrastructure.
To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.
India’s e-commerce market trends: Huge growth predicted as internet penetration rises
India has the highest business to consumer e-commerce growth forecast out of all the countries included the J.P. Morgan 2019 Payments Trends – Global Insights Report series.
With a forecasted compound annual growth rate of 26.5 percent to 2021,14 India’s e-commerce market represents a fast-growing opportunity for the e-commerce industry. India’s online shopping sector is currently worth $36.5 billion,15 a value that has consistently expanded at double-digit rates in recent years.16
Sales have been driven by a rising disposable income, increasing smartphone penetration and the marketing efforts of both brands and the government to promote online shopping.17
However, despite this prodigious growth, online shopping in India still only represents 2.9 percent of total retail sales18 and India’s e-commerce growth has a long way to go. The average annual per capita spend is also low, at $338.24.19 This is among the lowest spends per capita out of the countries included in our report series.20
Internet penetration is 24.6 percent,21 leaving three out of four Indians without access. The government is undertaking a series of schemes, such as ‘Digital India’ and ‘Skill India’ to improve this figure,22 and private businesses including Google are rolling out programs designed to ramp up connectivity in rural areas.23
Cross-border sales key to India’s e-commerce growth
For international e-commerce players, India is a market primed for success. Cross-border spending makes up the majority – 74 percent – of total e-commerce sales in India,24 as citizens seek out high-quality foreign electronics and lifestyle products, in particular.25 At present, the United States, the United Arab Emirates and Hong Kong are the top three countries from which to buy from abroad for Indian consumers.26
International businesses may also be further encouraged to engage in India’s e-commerce market after new e-commerce regulations are instated in 2019. The government is revising India’s privacy, data protection and international trade rules relating to e-commerce in an effort to modernize and standardize e-commerce operations in India.27
The government has also raised the amount of foreign direct investment allowed in the Indian business to business e-commerce market, which could improve sales and infrastructure.28
India a world leader in app-based payment methods
Mobile commerce is set to become the primary payment method for online shopping in India. It is already used for 46 percent of transactions,29 one of the highest rates in our report series. Mobile commerce will expand at a compound annual growth rate of 31.2 percent,30 to reach a value of $49.8 billion by 2021.31
The high growth potential of the e-commerce market in India is based on existing smartphone penetration, which is low, with only 22 percent of the population owning such a device.32 E-commerce growth in India will also be fueled by a tech-savvy generation – the average age in India is 27.9 and more than half of its population is below the age of 25.33
Over a quarter (27.6 percent) of the population is aged 14 years or under,34 and this new wave of consumers will soon be able to buy their own mobile devices. A historical lack of domestic desktops to access the internet and the rise of cheaper smartphone devices and data plans in the country in recent years is already driving uptake.35
India stands out for its high number of app downloads, which are translating into completed e-commerce sales. India’s app store downloads grew by 165 percent between 2016 and 2018,36 and while entertainment is behind much of this growth, shopping apps are also experiencing strong growth.
In-app transactions now account for 82.4 percent of all completed mobile commerce transactions.37 Offering compelling shopping apps is therefore an important step toward capturing the Indian online shopper. The highest-ranking shopping apps include Amazon, Flipkart and Myntra.38
Low mobile app uptake impacts India’s e-commerce market
Mobile commerce accounts for over a third (36 percent) of all e-commerce transactions in India.34 This rate is lower than China (76 percent)35, India (46 percent)36 and Singapore (42.3 percent)37 but places India at a similar level to major Western e-commerce markets such as Canada and the U.S. (36 and 38 percent, respectively).38,39 The mobile commerce market is forecast to reach a value of $1.6 billion by 2021.40
Increased mobile commerce sales will be supported by good smartphone penetration, which, at 75 percent,41 places it on a par with Singapore.42 This nevertheless means that a quarter of India’s population does not own a smartphone, offering further opportunities for growth.
Apps are relatively under-utilized in India. They are used in only 14 percent of completed mobile commerce transactions;43 in contrast, in China the rate is 67 percent.44 A lack of investment from domestic merchants presents international merchants with an opportunity to make their mark.45 Google, for example, has already highlighted both the need for increased talent in the India mobile commerce industry, and a lack of apps able to provide access to a wide range of goods and a frictionless transaction process.46
Cards and digital wallets quickly replacing cash
India’s e-commerce payments market, historically dominated by cash, is evolving to meet the demands of its increasingly smartphone-led online shopping culture, with cards and digital wallets rising in prominence.
Cards are currently the most-used payment method for online shopping in India, representing 29 percent of transactions, or $10.6 billion in sales.39 This is despite the fact that on a national scale card penetration is low, at 0.64 per capita for debit cards and 0.02 for credit cards.40 This suggests that cards have the opportunity to take an even larger share as the use of cash declines. Card use in India is expected to rise at a compound annual growth rate of 53 percent to 2021.41
Another fast-growing payment method in India is digital wallets, which are currently used for a quarter of all e-commerce payments.42 Digital wallet use is expected to grow at a compound annual growth rate of 80 percent to 2021,43 at which point it will be the primary online payment method, taking a 34.8 percent share of sales.44 There is a plethora of digital wallet options available in India already, with the most popular including Airtel Money and PayPal®.45
Cash on the decline
Cash still takes a significant share of India’s online payments market and is used in 17 percent of all sales.46 This is largely due to the longstanding popularity of cash-on-delivery methods, which enable e-commerce merchants to reach unbanked and rural customers and also reduces the risk of losses due to non-payment – if the receiver does not pay, the item is simply returned to the merchant.47 The use of cash in India is set to decline to take just a 10 percent of the market by 2021, as card and digital wallet adoption increases and regulatory changes spur a changing payments landscape.48
For example, the state’s demonetization of the higher-value Rs500 and Rs1000 bank notes has been designed to reduce corruption and encourage citizens to adopt digitized forms of payment.49 This has affected the number of merchants accepting cash on delivery: major players like Amazon, Flipkart and BigBasket have all limited or removed this payment option.50
As banking penetration in India increases, bank transfers are expected to rise quickly. Currently used for one in five e-commerce transactions, this payment method is expected to increase at a compound annual growth rate of 84 percent to 2021,51 to take a 30.2 percent share of the market.52
Key takeaways
- Given that India’s online shopping still represents just a fraction of total Indian retail sales, and the fact that the majority of those sales are from abroad, the Indian e-commerce market is hugely attractive to international merchants.
- Retailers are drawn to a sector that offers considerable appetite for international brands as well as few trade barriers to market entry. However, international brands should keep an eye on the Indian government’s recent focus on curbing the growth of foreign companies.
- While cards are currently the most popular way to pay for goods online, bank transfers and digital wallets are expected to become more popular methods of payment in India by 2021.
To learn more about payment trends in the world’s leading e-commerce markets, contact your J.P. Morgan representative or call us on:
US: 1-800-708-3739
UK: 0845-399-1130
Europe: +353-1-726-2909
E-commerce Payments Trends
International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s E-commerce Payments Trends aims to offer merchants the knowledge they need for global success through in-depth, country-by-country analysis.
1 IMF.com. India's Strong Economy Continues to Lead Global Growth, August 2018. Accessed March 2019
2 The World Bank. India profile, October 2018. Accessed March 2019.
3 Reuters.com, January 2019. ‘U.S. voices concern as India's e-commerce restrictions hit Amazon, Walmart – sources.’ Accessed March 2019.
4 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.
5 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA World Factbook, 2018.
6 World Bank Open Data. ‘India.’ Accessed December 2018.
7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via eMarketer, 2017.
8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
9 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via eMarketer, 2017.
10 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank and Statista.
11 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista.
12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.
13 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Reserve Bank of India.
14 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via eMarketer, 2017.
16 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
17 Ibef.org, December 2018. ‘E-commerce Industry in India.’ Accessed February 2019.
18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation, 2018.
19 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
20 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
21 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.
22 Export.gov, October 2018. ‘India – eCommerce.’ Accessed February 2019.
23 Ibef.org, December 2018. ‘E-commerce Industry in India.’ Accessed February 2019.
24 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation.
25 Export.gov, October 2018. ‘India – eCommerce.’ Accessed February 2019.
26 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Ecommerce Foundation.
27 Inc42.com, February 2019. ‘Data Protection, Privacy to Form Core Of Draft Ecommerce Policy: Report.’ Accessed February 2019.
28 Inc42.com, February 2019. ‘Data Protection, Privacy to Form Core Of Draft Ecommerce Policy: Report.’ Accessed February 2019.
29 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via eMarketer, 2017.
30 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via eMarketer, 2017.
31 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
32 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista.
33 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA World Factbook.
34 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA World Factbook.
35 Exchange4media.com, September 2017. ‘Shift from e-commerce to m-commerce accelerating in India.’ Accessed February 2019.
36 AppAnnie.com, 2019. ‘The State of Mobile 2019.’ Accessed February 2019.
37 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Grant Thornton.
38 SimilarWeb.com, February 2019. ‘Top App Store apps in India – Shopping.’ Accessed February 2019.
39 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
40 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via data obtained from National Sources.
41 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
42 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
43 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
44 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
45 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
47 PracticalEcommerce.com, July 2018. ‘Cash on Delivery Dominates Indian Ecommerce.’ Accessed February 2019.
48 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
49 TheHinduBusinessLine.com, January 2018. ‘E-commerce players stop cash-on-delivery payment option temporarily.’ Accessed February 2019.
50 TheHinduBusinessLine.com, January 2018. ‘E-commerce players stop cash-on-delivery payment option temporarily.’ Accessed February 2019.
51 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
52 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
53 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via The Wire, ‘The Economics and Future of E-commerce Fraud in India.’
About J.P. Morgan
J.P. Morgan offers a full suite of payments services to enable a seamless connection across the payments continuum for clients. We bring our consultative expertise, data-driven insights, and local service around the globe to provide a more unified view of payables, receivables and cash management. Merchant Services is the payment acceptance and merchant acquiring business of JPMorgan Chase & Co. (NYSE: JPM) – a global financial services firm with assets of $2.6 trillion and operations worldwide.i According to The Nilson Report, it is also the top merchant acquirer of e-commerce transactions in Europe.ii
i JPMorgan Chase & Co. Q4 2018 Earnings Report 2018.
ii The Nilson Report, #1132 May 2018.
This document is based on projected figures and is subject to change at any time. Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.
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