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Is Low Credit Card Penetration Holding Up eCommerce in Developing Markets?

Wednesday, August 1st, 2012

Credit cards are a way of life in western markets, but emerging markets do not appear to be developing the same addiction to plastic. In India, for example, only about 2% of the population owns a credit card.

On the surface, this would seem to be a major barrier to e-commerce, and for more established e-retailers such as Amazon, this might indeed be the case. But local e-retailers have adapted. Or, perhaps more accurately, they have built their infrastructure with this knowledge in mind.

For example, India’s largest e-retailer, FlipKart, as well as Vietnam’s Rocket allow shoppers to make purchases online, and then accept cash payment upon delivery.

Is this model sustainable? Will these emerging market shoppers get on the plastic bandwagon? Or will new technology save the day? Dealing in cash undoubtedly hurts efficiencies for these e-retailers, but trying to convert cash cultures to credit is a monumental task.

Contributed by Integer Asia-Pacific

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