Bengaluru, Dec 6 (IANS): Surge in internet penetration, swelling millennial population and rising uptake of mobile phones would make India the second largest e-commerce market after China, overtaking the US by 2034, said a report by global payments leader Worldpay on Monday.

"The Indian e-commerce market is set to overtake the US and become the second largest in the world in less than two decades, going head-to-head with China for the top position," said the 'Global Payments Report 2016'.

Leading the charge in the emerging markets, e-commerce in India is predicted to mature 28 per cent per year from 2016-2000.

"The Indian e-commerce market is predicted to reach $63.7 billion (Rs.4,34,200 crore) by 2020 and overtake the US by 2034, opening up huge opportunities for companies selling online," said Worldpay Vice-Chairman Ron Kalifa in a statement.

The annual report was compiled using Worldpay data and insights, external findings from Euromonitor, Datamonitor and ystats.com.

"It is imperative for merchants to stake claim to win over the commerce-hungry population and capitalise on future e-commerce growth," he said, adding leading e-tail players like Amazon and Alibaba are making moves, indicating incentive for merchants to gain foothold within India's e-commerce market.

"Much of India's e-commerce growth will come from rising internet penetration, which will take about 600 million citizens to online by 2020 from 350 million in 2016," said the report.

"As India invests in infrastructure such as the National Optical Network, which is undergoing trial roll-outs, millions of consumers will get access to fast internet.

"As the country's middle class switches over to 4G from 3G networks, both offered at affordable prices, India is expected to see more mobile shopping, especially amongst millennials," said the report.

Young people shopping via smartphones are responsible for increase in India's online spend, it said, adding that with 70 per cent of the population below the age of 35, millennials are expected to continue driving rapid digitisation.

But the report said that to position their business for success, merchants must recognise India's potential for e-commerce growth and its payment preferences.

Transfers and cash dominate the online payment landscape, with 27 per cent of the market preferring bank transfers, followed by cash on delivery at 22 per cent.

"As the country's payment infrastructure develops, new methods are expected to rise in popularity. Though only 8 per cent of online shoppers use e-wallet currently, mobile wallet market is projected to reach $5.1 billion in 2020," said the report.

"Our research shows 75 per cent of India's population does not have a way to pay online. But as more Indians get access to the internet and bank accounts, they develop confidence in buying online," added Kalifa.