Business Standard: November 30, 2017
Hyderabad: Flipkart co-founder and executive chairman Sachin Bansal believes that digital payments will become a game changer for the domestic e-commerce business in the next five years.
Cash-on-delivery continues to be the predominant payment mode among existing customers of e-commerce players but those who pay digitally show more resilience as they tend to stick to e-payments.
Bansal says that the current trend would be reversed over a period of five years, owing to a substantial decline in cash transactions.
Bansal was speaking at a panel discussion on payment platforms at the Global Entrepreneurship Summit (GES) on Wednesday. He went further to say that the combination of Aadhaar number and the introduction of the goods and services tax (GST) have not only made digital payments a lot easier, but they have also brought down the scope for cash payments.
Bansal also said transaction costs will not have any big impact on digital payments as costs are going to come down dramatically as the volume of transactions goes up. "In fact, the cost involved in cash payment is more than 2 per cent, if the efforts involved in cash payment are taken into consideration. In China, digital transaction costs have been as low as 0.0 5 per cent due to a high volume of digital payment transactions- a crucial factor that ensures that the underlining investments made on the payment infrastructure front are taken care of," he said.
All of this will be driven by the usage of mobile phones in India that is expected to touch $1-billion mark in the next five years as most users would be running on 3G/4G technologies. India is also likely to become a $7-10 trillion economy by then.
Responding to a question on the role of financial inclusion in digital transactions, Bansal said the use of digital mode was not that high, even though most people have started getting their salaries and subsidies directly into their bank accounts.
However, financial inclusion has brought people into the credit system and that itself has created an opportunity for companies and financial institutions, says Bansal.
"We are working with banks and product companies on ways to tap this opportunity," he adds.
Digital commerce has played a transformative role as people who did not have access to quality products were able to buy them online at lower prices. This will only multiply in future as payments through the digital mode will also increase, he said.
Digital payment platforms have revolutionised monetary transfers by offering low-cost technology for mobile-to-mobile financial transactions. PayPal’s vice president and chief international counsel, Lisa Mather, said the use of digital payments will enable seamless cross-border transactions and tap business opportunities for start-ups.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.