Amazon Pay, Google Pay, card payments dominate; 58% e-commerce payments alternative methods

The e-commerce sector in India is witnessing a seismic shift in payments methods with 58 per cent share of the market amounting to alternative payments. Mobile and digital wallets have eclipsed traditional payment modes, revealed an analysis by GlobalData. It called this change a “paradigmatic change” in consumer preferences and transactional behaviour. Cash has seen a significant drop, while the likes of Amazon Pay, Google Pay and card payments have increased.

The report underscored the digital revolution in the country, propelled by internet connectivity and a burgeoning e-commerce ecosystem. “India’s e-commerce market is growing at a healthy pace, supported by rising internet and smartphone penetration, and growing consumer preference for online shopping – the latter coupled with increasing consumer confidence in online transactions,” said GlobalData in its latest report.

The data analytics firm also revealed that India’s e-commerce market value is set to increase at a compound annual growth rate (CAGR) of 20.9 per cent from $147.5 billion in 2024 to $315.5 billion in 2028. To add to that, as per Telecom Regulatory Authority of India, there were 881.3 million internet subscribers, up from 865.9 million in December 2022. 

The strong momentum, it suggests, is encouraging merchants, especially SMEs, to enter the e-commerce space, as well as discounts and cashback offers by retailers such as Flipkart, Amazon and Myntra during their sales like Flipkart Big Billion Days, Amazon Great Indian Sale, and Myntra Big Fashion Festival Sale. 

“Alternative payments have gained huge traction in India since the demonetization in 2016. The COVID-19 pandemic has accelerated this trend as both consumers and merchants preferred digital payments to avoid exposing themselves to disease vectors such as cash. The growing popularity of alternative payment brands among consumers and merchants also supported this trend,” said Ravi Sharma, Lead Banking and Payments Analyst at GlobalData. 

It said that with brands such as Amazon Pay and Google Pay, alternative payment solutions have consistently gained importance among Indian consumers. Payment cards are the second most popular e-commerce method in India with a share of 25.7 per cent with credit and charge being the preferred card types, accounting for a 15.4 per cent share in 2023. Cash has seen a significant drop in market share for online purchases, accounting for only 6.2 per cent share.

E-commerce payments are expected to be driven by government initiatives such as Make in India and Startup India and an increase in the number of online shoppers. 

Sharma further stated, “The uptrend in e-commerce sales in India is likely to continue over the next few years supported by the growing consumer preference, improving payment infrastructure, and growing popularity of alternative payment solutions with these solutions dominating the ecommerce payment space over the next few years.”