Strong growth of ecommerce pushes sales of plastic money

Indian ecommerce is growing by leaps and bounds and here are some stats to support this fact. According to an ASSOCHAM-PricewaterhouseCoopers study, the ecommerce market, which is valued at $17 billion today, will touch $100-billion in the next five years. The compounded annual growth rate (CAGR) is also expected to be 35 per cent.

D S Rawat, Secretary General at ASSOCHAM said, “Online shopping has shown a handsome growth while brick-and-mortar malls are witnessing a slowdown. The growth in e-commerce looks impressive because of a low base and rising penetration of the Internet.”

Online retailers and sellers can rejoice that the average spend by online shoppers is going to rise from the present 65% to 72% in 2016. The study also predicted that the number of online buyers in 2015 will be 65 million compared to 40 million in 2014.

Rise of ecommerce equals to rise of plastic money

The growth of ecommerce has resulted in plastic money getting more popular than actual cash. Over the past few years, along with online shopping picking up, there has been a steady rise in number of credit & debit users also. Mobile wallets too have helped to push online sales. It is not just urban users, even in tier-II and tier-III cities increased usage of cards has been noticed.

Below are some figures:

• 16.3% increase in the use of debit cards in FY15

• 21.3% jump in credit cards by volume

• Value of debit card transactions grew by 14% and credit cards 23% in FY15

• In this FY, payments worth Rs 72,500 crore through credit cards and Rs 8,73,200 crore through debit cards were made

• 50% of online transactions happens through credit card and more than 40% through debit card

SBI’s Chief Economic Advisor, Soumya Kanti Ghosh says, “Ecommerce has to be one of the reasons for the uptick in credit and debit card sales today. Use of cash will come down significantly and this could lead to potential transformation in the Indian economy.”

President of Yes Bank, Shubhada Rao too admits, “There is a definite impact of ecommerce sector on card sales despite the cash-on-delivery option. There is an ease of shopping via cards and this has been discovered in smaller towns where some brands are not available. Credit cards give them an accessibility and we have seen spends rising.”

Etailers offer attractive incentives in form of discounts and no shipping/delivery charges for prepaid orders, which can also be a reason why plastic money is used more often as opposed to opting for COD.