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E-Payments constitute 35% in 2009-10 and growing…!

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When was the last time you pulled out a cheque for paying basic utility bills? Would you still prefer to stand in those long queues / dropping a cheque in the drop-box or squaring off the transaction from the comforts of your drawing room through e-payment?

Electronic commerce and finance are growing rapidly – In India, currently only 3% of the transactions out of the $1 trillion personal consumption expenditure are met by electronic payment mode. Needless to point that remaining dues are met by cash transactions. But, this phenomenon is correcting at a faster clip.

In an indication of the growing tech-savvy taxpayers opting for e-payment for filing tax returns, the online filing of tax-returns is expected to touch one crore-mark in the current financial year from 55 lakh in the last fiscal year.

In fact, the emergence of e-commerce has been at the heart of new payment mechanisms designed for speedy fund transfers more routinely – be it electronic fund transfers or smart cards-based electronic payment systems.

Moreover, with a significant increase in mobile and IVR-based financial transactions, the e-payment system is likely to grow exponentially in times to come and is gradually expected to notch a lion’s share of 55-60% of total transactions until 2015.

Well, rather than forecasting about the future for e-payments, let’s dwell into the hindsight data available for the same. In latest, RBI has indicated that the use of electronic means of handling funds for making payments has gone up sharply in the last 3 years.

Electronic Transactions

The ticket-size of the transactions has gone up. The value-wise data shows that the share of electronic transactions has gone up from 80.4% in 2007-08 to 88.3% in 2009-10. However, a look at the volume data concedes that individuals are yet to adopt electronic means for making payments in a big way – which constituted about 35.3% in 2009-10.

Interestingly, credit cards still remain the most popular method of payment in India. Indian netizens have emerged as the third biggest credit card users globally for online shopping. In fact, online transactions still form less than 10% of the total credit card spends. However, the fact remains that cash is still a king when it comes to desi people.

Modern payment systems promise to bring in large number of rural people in the country who have so far been excluded from the benefits of the financial system. E-transactions have received a boost due to advances in information technology that has revolutionized the payment channels.

Moreover, bankers have indicated that the customers are now feeling more comfortable with the additional authentication rule introduced in August 2009. The RBI has made it mandatory for banks to introduce an additional password for online transactions to prevent fraudulent transactions.

Apart from card-based payments, the payment modes through internet/mobile phone have been gradually gaining momentum and popularity. The mobile phones gateways are a part of successful growth strategy for the banks. Innovative technological solutions will further enhance the user experience for the electronic payments.

With many banks integrating their payment infrastructure and processing capabilities, the e-payments, in volume and value, will zip ahead faster across the electronic payment highway. Newer technologies, growing internet access, deeply penetrating mobile subscriber base, and most of all rising consumer confidence and convenient delivery and payment models are all set to fuel the e-payment transactions domestically.

What’s your take? Personally, I am still not hooked to the usual smart/credit cards. But, I make it a point to use Online banking facility to make my utility bill payments for the convenience purposes.

  1. online payments says

    very smart work…………..very valuable one……i likes it .good point raised about online banking service. Over here, I would like to point out a comparable commonness with me. I use HDFC’s online banking and I’ve paid my utility bills on the last day of the due date for a mixture of services, such as Telephone, Electricity and Mahanagar Gas, on numerous occassions.
    providentially, I’ve not come across any troubles of penalty of late expenditure on the last day. In fact, as soon as I push the ‘Confirm’ button to make my payment, the amount gets debited from my saving account immediately.

  2. Rohan says

    Yes, the amount is debited instantly in my saving account too, but I am nit sure who is at fault, whether the processing system of the Bank or the operator?

  3. Rohan says

    Online payment is there, but it does not necessarily provide the benefits one can expect.

    For ex: I paid my vodafone bill from my Axis Bank online banking service, and the amount was credit to my account after 2 days. The vodafone executive told me that payment would be credited within 2 hours, and it took 2 days. And I missed my deadline because of this thing despite paying before due date. I hope vodafone will not charge me late fee in next bill.

    In India, you have got lots of facilities to boast, but they do not work upto the mark.

    1. Viral says

      Rohan,

      Nice point raised about online banking service. Over here, I would like to point out a similar incidence with me. I use HDFC’s online banking and I’ve paid my utility bills on the last day of the due date for various services, such as Telephone, Electricity and Mahanagar Gas, on numerous occassions.

      Fortunately, I’ve not come across any problems of penalty of late payments on the last day. In fact, as soon as I push the ‘Confirm’ button to make my payment, the amount gets debited from my saving account instantly.

      Most of these companies do not take into consideration the date on which the amount reaches in their account, but the day on which we make payment.

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