Here's How Fintech Adoption Is Driving The E-Commerce Growth Story In India

Financial technology or Fintech has radically revolutionized the way we pay for our goods & services and has introduced a wave of new payments methods.

The payments landscape strengthened by fintech has evolved over the last few years to extend its wings to several markets, including the stock market, the insurance industry, the e-commerce market and the lending market, among others.

E-commerce players have benefitted the most with this revolution in fintech industry, as it has evolved the ecosystem including consumers’ need.  The fast-growing e-commerce market, which is predicted to mature by 28 per cent per year from 2016 to 2020 (According to a report by global payments firm Worldpay), India is set to become the second largest in the world in less than two decades.

E-commerce industry, to stay ahead of the curve, has realized the efficacy of bringing in innovative offerings to provide that premium and seamless checkout experience to its consumer while shopping online. This is where fintech comes into play, payment companies have paved the way for many e-commerce giants and newcomers to efficiently widen their reach and provide new age consumers what they need.  

The following trends in the e-commerce space will define their growth path in the coming years and fintech industry will act as a catalyst: 

For e-commerce companies to become competitive and profitable, basket size per user needs to increase while cutting down on the customer acquisition cost. For this to unfold, fintech will play an important role. With deferred payment options and micro credit facilities being offered by many fintech players in the market the dependency on cash on delivery (CoD) has reduced by 35-40%.

These credit facilities and other payment options while shopping online will further enable ecommerce to grow. For example, with buy now pay later options like LazyPay, consumers are opting for these offerings which has further reduced CoD and increased the demand for small ticket credit.

In 2015, $4.4 bn revenue lost in 2015 due to 20 - 30% of transaction failure at the payment page. Hence, there is a need for products/services which are faster and can give a higher conversion while doing online transactions.

Fintech players have been able to provide consumers with such a premium experience which includes hassle-free quick and easy shopping, no issue of phishing for passwords and without charging any interest on deferral payments. The collaboration of the e-commerce players with fintech industry has reduced the payment drop-out rate by 10%.