This decade has seen a spurt of dozens of E-commerce ventures in the country beginning with the emergence of Flipkart, then Myntra, Jabong, Snapdeal etc and now Amazon. It all began at a time when the average person was vary of buying anything online, let alone even think about it. This thought not only stemmed from the monetary point of view, but also a social and psychological one.
The concept was still alien in the country and yet, it was already flourishing in other developed countries. However, it wasn’t long until India caught up with the rest of the world. Many companies launched in this decade have now even reached the billion dollar club. Since then, the success of many such e-commerce ventures also called for the emergence of payment gateways of verifiable existence.
As a major portion of the E-commerce industry is based in and around Delhi, online payment gateway companies in this region are raising their stakes when it comes to future opportunities in this business hub. Delhi, also by virtue of being a capital city has emerged as a corporate hub with world-renowned MNCs setting up their India offices here. To fully understand what payment gateways are, here’s a little overview :-
What are Payment Gateways?
Due to the recent vigorous growth in the E-commerce segment, it has led to a parallel growth in the payment gateway market in India. Payment gateways are the primary checkpoint for all payments made online and are responsible for handling online transactions securely and confidentially.
This segment is likely to grow at an annual growth rate of 61% and reach a whopping 40 billion dollars by the end of this year.
To accept any online payment through credit cards, debit cards or net banking, an E-commerce owner needs to set up a merchant account with a bank. Now, the creation of a merchant account with each and every bank is a hellish task for any E-commerce venture. In a lot of cases, in terms of customer service, there is little or no support from banks.
It then becomes important for online businesses to go for a payment aggregator. These connect the merchant’s website with the bank’s payment gateway, even providing multiple payment options (like credit card, debit card, net banking and also cash cards) to an online shopper. It enables the customer to choose a suitable payment option. All payment gateway companies have tie ups with almost all nationalized and private banks. It substantially reduces the merchant’s work of tying up with the banks individually.
Payment gateways safeguard credit card details by encrypting sensitive information, like credit card numbers, to make sure that information is passed on securely not only between customers and merchant but also between merchant and payment processor. It cannot be caught hold of and obtained by any random person. In an effort to make e commerce more secure and problem free, all the latest technologies have been put in place.
Now that the basic idea of payment gateways has been established, it is important to also know about the factors that are fueling this E-commerce growth which is in turn creating business opportunities for payment gateways : –
a. Increase in internet accessibility
b. The smartphone revolution, emergence of mobile apps and 4g internet
c. The major share of young working population in India
d. All kinds of attractive deals offered by E-commerce companies from time to time
e. Highly convenient purchasing options
f. Constant innovation in the E-commerce ecosystem (like online groceries etc.)
g. Logistics infrastructure (like courier and packaging companies)
PayU India’s clients in and around Delhi include Goibibo, Jabong, Ferns n Petals, Snapdeal, Tradus.in, Rechargeitnow, Tomato, etc. Also, CEO of PayTM, Harinder Takhar said that majority of the company’s clients are based in and around Delhi which include Homeshop18, Snapdeal.com and Dish TV.
Not only is it a prime e-commerce hub, but the accessibility of decent office space at economical prices with good connectivity and infrastructure adds to the city’s status. With its development, Delhi is well in the running of dethroning Bangalore as being India’s Tech Eden. There’s no surprise in the fact that PayU has more than 90 percent market share in Delhi and NCR.
In August 2010 PayTM launched its online payment gateway services with 1,200 transactions per day, which has now increased to a tally of more than 1 lakh transactions and having around 74,000 users each day.
Until now, financial transactions are chiefly paper-driven in the country, electronic payments are seeing noticeable growth since the last five years. The average consumer is increasingly finding credit cards, debit cards and net banking for online purchases to be much more fuss- free than conventional methods of payment.
E-commerce is a burgeoning market. Online payments are increasing our convenience, letting us pay from the comfort of our homes, being our saviors when we are rendered cashless. But, the flipside is that online fraud is now on the increase too.
What makes India’s E-commerce market unique is the fact that there aren’t a handful of players controlling it, like in China (with Alibaba, Taomao and Tmall). In fact, the market share is divided amongst a number of companies. This gives customers so many products and options to choose from.
It might seem that the E-commerce industry in India is still lagging behind when compared to developed countries and even several other emerging markets. But, the International Monetary Fund and the World Bank have pegged India’s GDP growth at 6.4% and, it is estimated to grow quickly. Moreover, the Indian E-commerce industry has no shortage of funds which are abundantly available within the country and in some cases, through international investors. Generally, it has been witnessed that the E-commerce sector is maturing and a number of strong companies are well on their way to make their presence felt in the market.