India is now the world’s fastest-growing major economy, its growth rate having overtaken China’s in Q1 of this year. Total consumer spending on the subcontinent is set to exceed $3.6 trillion by 2020, and e-commerce sales totalled an estimated $7.7 billion in 2015 – up from $5.3 in 2014. Competition for market share in this booming digital economy will be particularly fierce in the years ahead. Mahesh Murthy, co-founder of India’s leading investment fund Seedfund, has estimated that first prize could be as much as 85% of the market, with second place receiving 8-10% and a distant third left with 0.8-1%.
Of crucial interest to this accelerating market in online purchases is security. Cash on delivery (CoD) remains, unusually, the most popular method of payment among online consumers in India – in part due to widespread concerns over credit card fraud. A survey in Q4 2015 found that 83% of respondents had used CoD within the past six months; the leading online retailer Flipkart sells as much as 90% of its stock through CoD in some cities. As purchasers must be present during delivery to complete transactions – and may then refuse the goods before doing so, leaving vendors to carry logistical costs – CoD comes with considerable disadvantages to both sides. The inconvenience to consumers, and estimated 24% extra manpower required of vendors over online payment systems, leaves CoD unsustainable as the dominant method.
The present lack of confidence in online payment systems is a source of considerable opportunity for the author of a credible solution. 65% of consumers in India use mobile devices to connect to the internet, in a country where mobile users are estimated to exceed half a billion – the second-highest in the world. According to GSMA Intelligence, there are currently 649.7 million unique mobile subscribers in India; GSMA’s research arm forecasts that by the end of 2020, this will reach 864.6 million.
There is, then, considerable potential appetite in India for the enhanced security of digital services. Mobile Connect provides people with a secure and convenient way to prove who they are, with the device that’s always with them; their mobile phone. Unique operator assets, such as KYC processes and credentials management, position operators to become the trusted providers of digital identity.
Last month, the operator-led authentication solution was launched in India by Aircel, Bharti Airtel, Idea, Tata Teleservices, Telenor and Vodafone. The event contained a variety of demonstrations illustrating Mobile Connect’s ability to provide seamless authentication. The launch of the service in India brings the number of potential users to nearly three billion.
As policy-makers and innovators in India attempt to push the country towards a ‘less-cash’ economy, the convenience and security offered by Mobile Connect place it very well to be a key driver of this coming transformation.