India’s rapid digital transformation
India’s digital transformation was jump started by ‘Digital India’, a campaign launched by the Indian government in 2015 aimed at ensuring the country’s citizens are connected through high-speed networks and can access a robust digital ecosystem. The economic rationale behind this campaign is clear; research from states that digitisation can create 65 million new jobs by 2025 and add US$1 trillion to the economy. This is a very positive indicator for global companies who are looking to build digital businesses in India.
India is at the forefront of a digital transformation that is redefining the way people consume and engage with media, finance and commerce. The economic rationale behind its ‘Digital India’ campaign is clear; research from states that digitisation can create 65 million new jobs by 2025 and add US$1 trillion to the economy.
High barriers to entry
Digital payment India market is growing at a rapid rate. It is estimated that India will have 500 million digital payment users by 2020, representing more than half of India’s population. This growth has been driven by a number of factors including the rise in online shopping and e-commerce, as well as an increase in smartphone usage.
The opportunities India has to offer are huge but changing regulation and rapid developments in the digital and payments landscape can be challenging, making India a difficult market to enter. Every online business hoping to make a successful entry to the Indian marketplace should be aware of these.
To succeed in India, it takes a deep appreciation of hundreds of subcultures and demographics. From a payments perspective, it also means understanding that local payment methods are the norm, not the exception.
Not least, every online business will need to be able to process complex and confidential personal data in a way that complies with India’s regulatory framework. It is also necessary that a team of experts can monitor and implement the many ongoing changes that will inevitably be adopted over time
India’s unique payments ecosystem
The global rise of digital payments is well documented. In the US, for example, it’s estimated that mobile payments will reach $27 billion in 2018, up from $24 billion in 2017.
Traditionally India has been a high-cash economy. However, in 2008, the Reserve Bank of India and Indian Banks’ Association set up the National Payments Corporation of India (NPCI) with the goal of migrating to a less-cash economy. The obvious replacement for cash was debit cards and since mobile phone use is so widespread, phone-based payments and eWallets.
RuPay, another NPCI initiative, essentially functions as an alternative to Visa and Mastercard, providing credit and debit cards, contactless payments, QR code payments and is used in nine other countries.
Conversely, from a consumer satisfaction perspective, online businesses should also be able to list services in Indian Rupees through its payment processes to maximise customer loyalty and satisfaction throughout the customer payment journey.
Finding the right partners is crucial to your success
India’s growing economy and young population make it one of the most lucrative markets for e-commerce. With the country expected to become the world’s third-largest smartphone market by 2020, digital payments are also on the rise — especially after the government’s demonetization initiative in 2016.
The opportunities India has to offer are huge but changing regulation and rapid developments in the digital and payments landscape can be challenging. That is why finding the right Payment Service Provider (PSP) is crucial for long term success.
In summary, a PSP should not only be able to guarantee its ability to manage data within the boundaries of Indian compliance regulations, including privacy, but should also be able to remove the need to establish its own local regulation compliant entity to enable the process of payments. Considering all the above, India is a large market, growing fast using digital technologies, making it very attractive for international payment gateway.”