Digital Goods and Secure Payments: The Sweet Spot for Direct Operator Billing

E-commerce, and the might of VC money, is taking internet mainstream in India. More first time internet users came online in 2013 than the sum total of all Indians who had ever seen a website till 2009. Impressive growth, but now what? Are there any predictable trends?

First, cyber crime is likely to rise at a faster click than expected. New users are easy pickings for cyber criminals. With banks dispensing debit cards to the uninitiated, it is bounty time for cyber crime networks all over the world (Side note- if you want your bank account to be safe and save some annual charges in the process, insist on just an ATM card). Despite two factor authentication (OTP is flawed), growth rate of cyber crime in India still tops 100% year on year.

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Image Source: http://dazeinfo.com/2015/01/06/cyber-crimes-in-india-growth-2011-2015-study/

Cash on Delivery will remain the mainstay payment method for Indian e-commerce. Forget about the ‘touch and feel’ and ‘peace of mind’ arguments, it just makes more sense for your money to sit in your account and accrue interest for the few days (few weeks if you are unlucky) that it takes the courier to deliver.

Intangible digital goods like e-books and e-music present a separate challenge. Credit and debit cards may seem like the only option for them, but they may actually be the worst option. This is because of the nature of digital goods- can be offered by anyone online, delivery can never be physically verified, and they typically involve very small value transactions. Many payment processors turn away digital goods sellers because the risks outweigh the revenues from such goods. Despite these challenges, the digital goods market is at a turning point in India and needs a safer and a smarter solution.

Direct Operator Billing offers a ready made solution. It is available to almost everyone and is less prone to fraud because of its ‘closed’ nature, i.e., no peer-to-peer and no way to cash out of the system.