Columbus, Ga.-based payments processing company Total System Services Inc., or TSYS, has released a study highlighting potential growth in India’s electronic banking industry.

Citing an expanding middle class, Amit Sethi, TSYS’s director of India and Southeast Asia, said the country is poised for a transition from paper to electronic payment methods.

“In the emerging BRIC (Brazil, Russia, India and China) markets, cash remains king; but in India the tide is turning as consumers increasingly conduct electronic payment transactions with either plastic cards or, to a lesser degree, mobile phone-based applications,” Mr. Sethi said.

The white paper titled, “Incredible India! Four Imperatives to Accelerate Electronic Payment Adoption,” describes 350-400 million out of the country’s 1.2 billion people as middle class, with an annual growth rate in this demographic of about 5 percent.

Electronic payments made up 19 percent of total transactions in India over the course of 2006, but expanded to 43 percent last year.

Challenges to further growth in this industry include a lack of legal protections and country-wide infrastructure capable of handling electronic payments.

Mr. Sethi notes that the governments of Brazil and China have made efforts toward bank regulation while private enterprises there have invested in modern infrastructure like ATMs. India is still behind both of these emerging markets in these areas.

Continuing consumer faith in cash-only can also be a challenge, necessitating education on the benefits and security of electronic payments.

Despite these drawbacks, Mr. Sethi emphasizes the opportunity for domestic and foreign financial institutions to take the lead in an expanding industry.

TSYS has already invested India’s electronic payments sector, with three offices and about 400 employees there.

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