Huge Potential For E-Commerce - Mohan Nair, Chief Marketing Officer, CCAvenue

Today a wide gamut of transactions is possible with the help of internet-based banking. This has also led to more options for the buyers and the sellers because of the use of debit and credit cards. This would not have been possible without the active involvement of various banks and the evolving e-commerce system.

What is the role that payment gateways play in the overall economy scenario or in the overall banking space? How do see this evolving considering that the banking system in the country is going to change for good?

The e-commerce market today is witnessing a CAGR of more than 33 per cent year-on-year from the past three years. Our estimate is that by the year 2017, we should be close to USD 200 billion.

If we consider the demographic profile of India, about 65 per cent of the Indian population is below 35 years of age. We have a young vibrant population. Additionally, we have access to satellite television, broadband internet, the latest mobile phone technology, etc. so that the outreach of information has grown tremendously. This is linked to increasing aspirational value. As of July 2012, internet penetration on mobile phones has surpassed that of normal desktops and laptops. That is the pace with which internet penetration is growing, despite the fact that internet penetration is only 12 per cent of the entire population.

All this presents a huge potential for e-commerce because people can now procure what they want with this payment gateway. In the banking sector, this translates to e-banking facilities, which provides the gateway for payment of bills, transfer of funds, etc.

What has been your experience with the Indian banking system from the time you are doing business in India?

The biggest change is in terms of e-commerce. Today a wide gamut of transactions is possible with the help of internet-based banking. This has also led to more options for the buyers and the sellers because of the use of debit and credit cards. For instance, the RBI has come out with ‘Rupay’, a card that now competes with the likes of Mastercard and VISA. This would not have been possible without the active involvement of various banks and the evolving e-commerce system.

On the home front, CCAvenue is today India’s largest payment gateway. Started in 2001, we have more than a decade’s rich experience and we power more than 85 per cent of all e-commerce merchants in this country. Take, for example, travel portals like MakeMyTrip, ClearTrip, Yatra, TravelGuru which are all being managed by us. In the education sector, the All India Council of Technical Education (AICTE), the largest body that conducts all kinds of examinations and entrance tests, is managed by us. On the retail side, we have clients like Flipkart, Jabong and Myntra.

How has been the transition for Indian consumers who have gradually shifted from cash-centric to card-centric transactions?

It has not been smooth enough for many reasons, and we cannot blame any particular segment. To begin with, the transition can be better if we are equipped with the right infrastructure. For example, in many of the developed nations entire cities are Wi-Fi enabled, while here even broadband access can be difficult in some places. Therefore, not everyone can migrate to card-centric transactions.

Also, the attitude to not using cash is changing very slowly. Most people would still prefer using cash because it does not show up in the records. There is a lot of unaccounted for wealth in our country and cash is the best way to use it. Also, many people still feel that giving information about the credit card for an online transaction may be a big risk.
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So what we have been doing is to act as not just the payment gateway for a merchant but also provide value-added services to make the experience for the user a trustworthy and pleasant one. This prompts him/her to use more of the e-commerce facility. We have also been at the forefront of using innovative approaches. For example, we have launched SNIPS (Social Network Instant Payment System) through which the ‘likes’ on a particular brand’s Facebook page can be converted into a promotional campaign.

So how do you rate the banking system and the facilities it offers?

It’s quite robust and the good part is that the banking sector has invested a lot in information technology to ensure that online payments and e-commerce grows. However, banks have their own technology vendors. Depending on vendor to vendor, we experience fluctuations and downtimes that affect our conversion and success rate. But I am confident that the scenario will stabilise in due course. Of course, there have been issues about certain things like TDR, MDR, and rates but these will get sorted out. Meanwhile, it’s good to see the RBI promoting RUPAY so aggressively so that India can become a cashless society, as is the case with other countries.

Do you have control over defaulters?

That kind of control lies with the bank and in some cases, the merchants. We are only the technology provider to route the transaction to its culmination. Eventually, it is up to a particular bank or MasterCard or VISA or any such company to give a signal that the transaction should not go through for any particular reason.

Can the cost of executing a transaction be reduced?

The cost of transactions is not passed to the consumer. The online payments are between the merchants and the banks, and we are simply the aggregators. For example, ClearTrip has a deal of 10 per cent cash-back on Citibank card and our role is to simply see that the transaction is configured that way. Eventually when disbursement happens, we retain our fees and the rest is given to the merchant.

Where do you see your business going in another three to five years?

We would grow at least thrice in three years. If all the various parameters such as infrastructure and technological robustness; customer education; and value trust and the value system in e-commerce fall in place, our scope to grow will expand. As of now, 85 per cent of e-commerce is driven by the travel segment. For instance, 75 per cent of ticket booking with the IRCTC is done online. However, there is tremendous scope in the education field too because institutions are now accepting online payments.

Do you think the Indian architecture and system is ready for e-commerce?

Yes, it certainly is superior to many other countries who claim to have larger penetration of e-commerce. The architecture and banking system that India has is like the Indian Railways. We always discuss a lot about the various issues and problems about them but we are ultimately proud of the kind of network that the Indian Railways has.