A guide to alternative payment methods in India

Everything you need to know about Indian e-commerce and payment preferences

India: an e-commerce & payments primer

India is a booming e-commerce market, with growth rates for the whole market averaging 16% over the next few years and peaking at 185 [1]. Home to a young and increasingly connected population, the country is highly banked, has a dynamic domestic payments sector and is home to a multi-billion and rapidly expanding e-commerce logistics sector. 

For a year, ending in summer 2022, both Mastercard and American Express were unable to operate in India, a country with a population of 1.4 billion, an economy worth almost US$ 3 trillion and with an e-commerce market valued at US$83 billion [1]. The country’s central bank ordered both payment giants to stop processing payments because of what it claimed were data compliance issues. The bans were only lifted in June and August 2022 [2] [3]. 

During that time, locally preferred payment methods became more important than ever to e-commerce merchants operating in India. And they were already very important. Indian consumers only pay for 28% of all online purchases using a credit or debit card [1]. The remaining 72% of purchases they pay for with bank transfers, e-wallets and other types of alternative payments.

Looking specifically at cards, Visa is the most popular payment card, with a 48% market share [1]. Mastercard has 28% and American Express 1%. The remaining 23% is made up of cards issued by local schemes. Even in the card market, merchants cannot rely on simply falling back on Western payment models. Failure to support local card schemes will prevent merchants reaching those consumers who use those payment methods. 

The future of Indian payments gives every appearance of being even more digitised than the present. Over the five years to 2022, the volume of digital payments grew by 50% [4]. One of the reasons for this has been strong institutional support the Reserve Bank of India. And this shows no signs of changing. In June 2022, the central bank unveiled a new series of initiatives designed to promote the growth of e-payments and their availability to all of India’s citizens [5]. 

The Indian e-commerce market

In 2022, the Indian e-commerce market was worth US$83 billion [1]. This is forecasts to increase to US$150 billion by 2026 [1]. The average Indian online shopper spends around US$60 a year with e-commerce merchants [1]. The most popular online purchase categories are electronics and media (bought by 34% of online shoppers), fashion (27%) and personal care (24%) [1]. 

Just over a quarter of all the online purchases Indians make are cross border [1]. The total value of this commerce is US$18 billion [1]. The most popular online shopping destinations outside India are the United States (accounting for 21% of all cross-border purchases), Australia (14$) and China (11%) [1]. 

A recent report by Bain estimated that by 2027, there would be more online shoppers in India than there are in the United States [6]. Between 2021 and 2027, Bain analysts expect the number of online shoppers in the country to increase from 190 million to 450 million [6]. 

The Indian online grocery market is expected to grow by 57% between 2022 and 2024, reaching a value of US$18 billion [7]. Nor is grocery the online section that’s booming. Between 2022 and 2025, the size of the online fashion market is expected to almost double, to US$43 billion [8].  Online sales of electronics are expected to increase by nearly 15% a year between 2022 and 2027, rising to a value of US$24 billion a year [9]. 

Asked why they shopped online, Indians told a 2022 survey that they were looking for cashback offers (50% of respondents) and product discounts (46%) [10]. Since COVID, the older generation has been coming online in ever greater numbers. The majority of new e-commerce users are now over 45 years old [11] And almost half of new shoppers are women [11]. 

Indian e-commerce: enabling and limiting factors

Eighty-three percent of Indian adults have a bank account [1].  But just 3% have a credit card [1]. Two things instantly stand out about these statistics. In some markets, it might be feasible, if not equitable or fair, to ignore the 17% of the adult population that doesn’t have a bank account. In India, this means giving up on the commerce of over 176 million people. That’s a lot of lost opportunity. 

Looking at e-commerce today, Indians pay for 28% of all online purchases using a credit card [1]. But just 3% of Indian adults actually have a credit card. This almost certainly means that a very small number of wealthy consumers are overrepresented among the e-commerce user base. As more Indians shop online, the proportion who don’t have a card and need another way to pay will grow. 

India is 44th out of 160 countries in the World Bank’s Global Logistical Performance [12]. This puts India in front of many other emerging economies. There is also a major public and private effort underway to improve the country’s logistics infrastructure. In September 2022, the Indian government launched its New Logistics Policy. 

Among other things, the government has promised to work with the private sector to bring the average costs of logistics down from 14% of GDP to single figures [13]. This should help to reduce delivery costs across all sectors, including e-commerce. 

In the meantime, the private e-commerce retail logistics sector is already growing at a rate of 24% a year and is expected to do so until at least 2026 [14]. This is a faster the e-commerce market, which will grow by an annual average of 16% during the same time period [1]. This should mean significant and increasing extra capacity within the system over the next half decade. 


  1. Original PPRO research
  2. https://techcrunch.com/2022/08/24/india-american-express
  3. https://techcrunch.com/2022/06/16/india-lifts-ban-on-mastercard
  4. https://www.imf.org/en/News/Articles/2022/10/26/cf-how-indias-central-bank-helped-spur-a-digital-payments-boom
  5. https://thefintechtimes.com/reserve-bank-of-india-pushes-digital-payment-capabilities-with-latest-payment-vision
  6. https://economictimes.indiatimes.com/tech/technology/ecommerce-user-base-in-india-to-outpace-us-in-two-years-bain-report/articleshow/94767324.cms
  7. https://www.forbesindia.com/article/brand-connect/the-changing-trajectory-of-ecommerce-in-india/79447/1
  8. https://www.statista.com/statistics/1294150/india-online-fashion-market-size-in-d2c-sector
  9. https://www.statista.com/outlook/dmo/ecommerce/electronics/india
  10. https://www.indianretailer.com/article/whats-hot/retail-trends/50-pc-of-indians-are-motivated-to-buy-online-for-value-for-money-deals.a8003
  11. https://www.bcg.com/publications/2022/e-commerce-in-india-ten-things-you-should-know
  12. https://lpi.worldbank.org/international/global
  13. https://economictimes.indiatimes.com/small-biz/sme-sector/national-logistics-policy-indias-new-policy-framework-to-be-globally-competitive/articleshow/94292753.cms
  14. https://www.indianretailer.com/article/technology/whats-hot/indian-e-commerce-retail-logistics-market-to-be-worth-6-3-bn-in-fy26.a8069


General Information

  • Population 1,393.4 m
  • Population 15 + 1,036.1 m
  • Online population 755.2 m
  • Area 3,287,263 km2
  • Currency INR
  • GDP 2,946.1 bn $US
  • GDP per capita 2,114 $US
  • Card-based payments
  • Cash-based payments
  • Bank transfer
  • Wallets
  • Other
[{"label":"Card-based payments","value":"28"},{"label":"Cash-based payments","value":"9"},{"label":"Bank transfer","value":"12"},{"label":"Wallets","value":"45"},{"label":"Other","value":"6"}]
Banked population
  • India 83%
  • Asia Pacific 76%
  • World 67%
Credit card penetration
  • India 3%
  • Asia Pacific 29%
  • World 19%
Internet penetration
  • India 54%
  • Asia Pacific 61%
  • World 62%
Smartphone penetration
  • India 61%
  • Asia Pacific 62%
  • World 70%

The Indian e-commerce sector is forecast to grow rapidly. This is in part driven by the increase in internet connections from 622 m in 2020 to 830 m in 2021.

The popular payment method UPI is going international with agreements being signed with France, Singapore and the UAE. However, payments processing will remain in India.

After a year the Reserve Bank of India has lifted the ban on Mastercard onboarding new customers, after Mastercard showed compliance in following the Indian payment rules on storing payment systems data.

The Indian social commerce market is expected to grow by CAGR 62.4% between 2022 and 2028 to reach 143,583.3 m $US in 2028.

The most popular Indian e-commerce site in July 2022 was amazon.in with almost 303 m visits.

Future e-commerce trends (2021-2026)

B2C e-commerce ($US billion)
2022 82.7
2023 97.9
2024 113.8
2025 131.4
2026 150.3
E-commerce spending per capita ($US)
2022 61
2023 72
2024 83
2025 95
2026 108
E-commerce spending as % of GDP
2022 2.5%
2023 2.6%
2024 2.8%
2025 2.9%
2026 3.0%


The E-Commerce Market

Top e-commerce segments

  1. Electronics & Media: 34%
  2. Fashion: 27%
  3. Food & Personal Care: 24%
  4. Toys, Hobby & DIY: 11%
  5. Furniture & Appliances: 5%

Cross-border e-commerce

  1. Cross-border proportion of total e-commerce – 26%
  2. Value of cross-border e-commerce – 17.7 bn $US
  3. Online shoppers who have shopped cross-border – 49%

Top 3 cross-border shopping origin markets

  1. US: 21%
  2. Australia: 14%
  3. China: 11%
B2C e-commerce growth 20->21
  • India 32.4%
E-commerce % of total retail
  • India 6%
  • Asia Pacific 29%
  • World 20%
E-commerce completed on a mobile device
  • India 58%
  • Asia Pacific 65%
  • World 53%

The Credit Card Split

  • Visa
  • Mastercard
  • American Express
  • Local Schemes
[{"label":"Visa","value":"48"},{"label":"Mastercard","value":"28"},{"label":"American Express","value":"1"},{"label":"Local Schemes","value":"23"}]
  • E-commerce market size 68.3 bn $US
  • E-commerce spending per capita 51 $US
  • E-commerce spending as % of GDP 2.3%

The information on our Insights pages has been compiled by us in cooperation with Datamatics and Wright & Brown. The data shown is partially owned by us and partially owned by GlobalData. © 2021 by PPRO Financial Ltd. No data and information can be used for any further publication without the explicit approval of PPRO.

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