ROLE OF E-COMMERCE IN THE USAGE OF PLASTIC MONEY IN INDIA Veronika Bhagoria1,Chandra Bhooshan Singh2
1Academic Associate at IIM Indore, 2Assistant Professor at IMI Indore
Abstract- The rapid changes in the Internet world have led to changes in the electronic market, especially the speed of information creation relative to the normal market, the shortening of the time between search and product, and the ability of sellers. Although and the buyers are far away. Also this type of e-commerce business has highly impacted the usage of plastic money within the country. People are nowadays using debit and credit cards to make the payments. This paper includes the information regarding how popular are the e commerce business and how they have impacted the usage of plastic money within the country.
Keywords: E-commerce, Debit card, credit card, Covid-19 etc.
1 INTRODUCTION
As we are aware of the fact that India since independence has been a developing country.
The whole country is under growing phase. And as a part of growth there are several new trends & businesses have entered the market recently. Among these new businesses E- commerce is the business that is at its peak. Today people are highly dependent on this business. Not only are the people dependent rather they love this business, because such business is much more efficient and convenient.
E-commerce industry basically stands for Electronic-commerce, deals in goods and services through online platform. It‟s growing day by day. We are also aware of the current scenario of the country is suffering from the pandemic i.e. „COVID-19‟, which the whole nation has to stay back at their homes which led to „no business‟ condition in the market.
The COVID19 pandemic has disrupted the way people buy products and services. The existing social distancing and restrictions on the movement of people make consumers tend to e-commerce. In this condition e-commerce has played a great role. People also encourage such business so that there would be less if physical interactions.
Consumers have moved from stores, supermarkets and shopping malls to online portals to purchase products, from basic commodities to branded products.
The e-commerce industry responded actively and seized opportunities. Innovative solutions, coupled with the expansion of e-commerce coverage, have led to unprecedented growth and launch of new digital businesses.
E-commerce companies continue to expand beyond large cities to expand their scope of influence.
Also, the plastic money is playing a great role in such business and in current situation. As it has led to less physical exchange of the money also the chances of transmission of the disease is somehow reduced to an extent. Plastic money (debit/credit card) has made online transaction much easier.
In this paper we would be focusing on how e-commerce has impacted the usage of plastic money.
1.1 E-Commerce
E-commerce stands for Electronic-commerce. The negotiation of goods and services through electronic media and the Internet is called e-commerce. E-commerce involves conducting business with the help of the Internet and through the use of information technology such as electronic data interchange (EDI). It involves the website of a provider that sells or provides services to customers directly from its portal. They use a digital shopping cart system and allow payment by credit card, debit card or electronic funds transfer. The e- commerce industry helps reduce the cost of managing orders, while interacting with a wide range of suppliers and business partners. It also involves any form of business transaction in which the parties interact electronically rather than through physical exchange or direct physical contact.
1.2 Concepts of E-Commerce in India
Single-Product: This is the automotive sector portal that offers the sale and purchase of vehicles, including motorcycles. Equity and stock market sites also offer services along with research options, comparing through this type of portal. Other major industries that offer their products and services are real estate, travel and tourism. Marriage and employment websites are also very popular throughout India.
Multi-Product: Some ecommerce portals target customers of all products and services that can offer almost any kind of goods and services under one roof. The Indian e-commerce portal is dedicated to clothing and accessories for men and women, health and beauty products, books and magazines, computers and peripherals, vehicles, collectibles, software, consumer electronics, consumer electronics, jewelry, audio/video entertainment products and gifts, Real Estate and Services Business and Opportunities, Employment, Travel Tickets, Weddings and more.
1.3 Plastic Money
Plastic cards are one of the most popular payment methods. In reality, plastic cards are an unavoidable part of our lives. Cardholders offer a choice of cash and cheque for easy and convenient payment of goods and services. Credit cards, debit cards, ATM cards, etc. are used as alternatives to money such as cash and cheque, are made of plastic, and are also called plastic money.
Plastic cards are issued to users by various organizations (called card issuers) such as banks, retailers such as Big Bazaar, Shopper Stop. There are different plastic card programs like MasterCard, Visa, Rupay Cards, American Express, Diners Club, Maestro, etc. In this paper the major focus is on debit card and credit card which is mostly used by the people to make online transactions.
Debit Card: The debit card is connected to the account of the cardholder, that is, the person who owns the card. Generally it is issued by banks and financial institutions. With a debit card, the amount is immediately deducted from the account associated with the card.
You can buy as long as you have money in your account. Debit cards are a way to "pay now". If you have 5000 Rs in your account so, you can only spend up to 5000 not more than that.
Credit Card: A credit card is a small plastic card issued by a financial institution such as a bank. If you're buying with a credit card, the name credit means buying with a loan. You'll have to pay it back later (not a free lunch in your life!). There are restrictions on credit card purchases. Say if you have Rs 20,000 in your account and your credit limit of the card is 50,000 then you can spend up to 50,000 but if you have 70,000 in your account you cannot exceed the limit of 50,000. You need to repay the amount bought on credit by a due date.
2 REVIEW OF LITERATURE
Rahmath Safeena, Hema Date and Abdullah Kammani (2001), states that, the various areas where the banks are preparing to use ebusiness approach include familiar and relatively mature electronically based products in developing markets, such as telephone banking, mobile banking, credit cards, ATMs, and direct deposit. This means that most of the banks have recognized the need to change their business process to conform to changing business trends in order to keep up with competition. The customers are using net banking, to pay the utility bills, insurance premium, to book orders online, to book railway tickets also to book flight tickets, purchasing the products online using net banking or online banking (e-banking), credit cards, debit cards or smartcards also. The development in the e-business however means that an increasing number of jobs are being changed from traditional tellers to branch advisors/ counsellors. Bank staff is increasingly asked to provide highly qualified financial advice rather than perform simple teller
to make payments are more likely to display Credit card, also there is a direct relationship between innovative payment methods and increase in spending.
Al-Nuemat, 2017 [18] Reviewed the system of Jordanian legislation on credit cards.
He pointed out that the use of electronic cards has been widely recognized in recent years due to the spread of banking services in Jordan. He also discussed that legislators in Jordan did not amend the special legislative system of credit cards. As legislation in this regard may affect in many ways, which puts people in confusion and fear of the use of credit cards.
Lola Hernandez, et al., 2017 [19]Compared cash and Debit Card in terms of their role in controlling the amount of exchange. The reason for this study was the recent global economic problems. The study showed that both cash payment or through debit cards are equally useful to monitor household expenses based on consumers who make purchasing decisions.
Weng Marc Lim, Woo Kan Ng, Jin How Chin and Alexander Wei-Xiang Boo.
(2014)72, have conducted study on, “Understanding Young Consumer Perceptions on Credit Card Use: Implications for Responsible Consumption”. They have concluded that the positive and negative perceptions have direct impact on credit card selection, use satisfaction and loyalty. The perceptions towards credit cardholders and related banks are significant factor to develop loyalty towards credit card. There is positive and negative perception of credit card users, which determine their loyalty towards credit cards.
Sushma Patil, (2014)71, has discussed about the increasing use of plastic card, specifically for online payments, in her study titled, “Impact of Plastic Money on Banking Trends in India”. They adopt and use credit card because of 24×7 services, more discounts while shopping, no hassles of carrying cash and ease of use and security of money. Because of no hassle of carrying cash, ease of use and security makes more use of plastic card - credit card for online payments.
2.1 Impact of e-commerce on Usage of plastic money
The rise of e-commerce in India is driving consumers towards plastic money rather than putting cash in their wallets. Banks say the New Age sector is one of the key forces that boost the value of transactions and sales of credit and debit cards in India.“Ecommerce has to be one of the reasons for the uptick in credit and debit card sales today. Use of cash will come down significantly and this could lead to potential transformation in the Indian economy,” said Soumya Kanti Ghosh, chief economic advisor at SBI.
According to data from the Reserve Bank of India, FY15 increased debit card usage by 16.3% and credit card usage by 21.3% compared to a year ago. Debit card transactions surged 14% and credit card transactions surged 23% in fiscal year 2015. Increased usage occurs not only in large cities, but also in Tier II and Tier III cities.
According to data on volume released by RBI, by July, 236 million credit and 2892 million debit cards were used by Indian consumers. So far this fiscal year, payments of 72,500 rupees by credit card and 8, 73,200 rupees by debit card are being made.
HDFC Bank has issued more than 6 million credit cards and more than 22 million debit cards, and these numbers are growing by about 30% every year. "Approximately 50%
of transactions are conducted in the form of online credit cards, and more than 40% of transactions are conducted in the form of debits, and this proportion is increasing year by year. They are also providing several offers on the online transactions. Also, they expects that online transactions may grow up to 70%.
According to data from the Internet and Mobile Devices Association of India, in December 2014, India's digital commerce market reached Rs 81,525 crore and is expected to exceed Rs 100 crore by the end of 2015, from of which online travel generates the most income. part. India.
2.2 Future growth of e-commerce in India
3 CONCLUSION
As per the above collected information it can be clearly seen that E-commerce business is the emerging business in the country and has the broad scope in future. People are accepting such businesses in their day to day life. The growth of electronic commerce has resulted in the plastic currency being more popular than real cash. In recent years, with the rise of online shopping, the number of credit and debit card users has also steadily increased. Mobile wallets can also help drive online sales. Not only users in cities, but even in second and third tier cities, the use of cards have also increased. So, it can be conclude that e-commerce has a high impact on the usage of plastic money within the country.
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