The growing trend of online shopping is not only good news for e-commerce portals but banks and credit card companies are also enjoying the fruits of the new online shopping trend. While the growing internet penetration in India is likely to touch $4 billion by the end of the year, and $45 billion by the end of 2020, the payment solutions offered by banks and credit card companies have an equally impressive growth story. In fact credit card companies are enjoying the success of online retailers by having good revenues. Let us take a look at the correlation between the growth of Indian online e-commerce and credit card companies and their possible growth in the coming future.
Online Transactions Beneficial for Banks: Every time a purchase is made online through any e-commerce portal, banks and credit card companies earn substantial revenue. The issuing bank of the credit card earns on an average somewhere between 1 to 1.5% of the total amount spent shopping by the credit card holder. The lower transactional costs of a credit card purchase makes it more profitable to the banks instead of an ATM withdrawal for cash or a physical visit to the bank branch for cash withdrawal. It is no surprise then that lenders including credit card companies are partnering with various online e-commerce platforms offering active discounts for the user in case of any purchase.
Banks Partnering E-commerce Portals:
Banks are partnering e-commerce portals as a mutual collaboration is helpful to both parties. While the increasing trend on online sales is catching up with a large number of buyers with each passing day, banks do not want to lose out an opportunity to offer its card holders the service to purchase goods online. The e-commerce companies also benefit as the credit card companies tie up with them offering payment gateways allowing them to offer their goods and services to a large number of people. E-commerce portals also offer a large number of discounts and cash back services for credit card holders of various banks allowing users the advantage of getting discounts while shopping using their credit cards online. The use of encrypted payment gateways offered by the banks and credit card companies also make sure that all credit card transactions are fully secure and come with no security hazard.
Banks Introducing Exclusive E-commerce Portals:
Instead of being passive partners with e-commerce websites only offering payment solutions, banks and credit card companies are today coming up with their exclusive online portals offering products for their credit card holders. Banks are collaborating with various online retailers to develop their very own online marketplace where credit card holders can redeem their reward points and shop for various goods and services. HDFC Bank and IndusInd Bank is one of the first banks to have launched e-commerce sites exclusively for customers. While IndusInd Bank has recently launched a portal at themorestore.in exclusively for the credit card holders in collaboration with Onemi.in, an e-commerce company other banks are likely to follow suit. According to credit card industry trends, the overall credit card spends have gone up by over 30 per cent per annum as banks and credit card companies have taken a proactive role in promoting their online stores built in collaboration with various e-commerce portals.
International Credit Cards Tie Ups Galore: Another new credit card trend that is catching up in the Indian online retail space is the collaboration of international credit cards with online retailers. Flipkart.com, one of India’s biggest and most well known online retailer has inked a deal with Visa CyberSource allowing the use of international Visa credit cards. The use of international credit cards on online e-commerce portals will allow overseas customers to make purchases for loved ones located in India. With the increasing collaboration of credit card companies and e-commerce retailers, some of the bigwig online retailers have applied for Payment Card Industry Data Security Standard (PCI-DSS) 2.0 certification helpful in credit card processing to make the process of card purchase simpler, more secure and more profitable for both retailers and e-commerce websites.