India's biggest and most popular internet portal has started accepting cash payments for online purchases.

Rediff.com, which was set up four years ago, feels this would help get more business in a country with a low credit-card penetration.

Only 3.5m of India's one billion people have credit cards, and credit card companies do not give credit cards to students and even some professionals.

"What's amazing is that a large number of women also do not have credit cards," Ajit Balakrishnan, chairman of Rediff, told BBC News Online.

"Credit card companies don't offer them cards because they don't earn, but that doesn't mean women have less spending power."

Mr Balakrishnan says most internet companies go by e-commerce experience of the US, which has almost 100% credit card penetration.

Japanese experience

"The situation is different in other parts of the world. In Japan, for example, they had very low credit-card penetration. But they experimented with cash payments for online purchases and are now very successful."

Rediff has tied up with Elbee, an associate of US based delivery service UPS, to deliver its products within the country.

Elbee promises to deliver products within one to three days and will pick up cash payment at the same time.

The service will be available at 800 locations in urban and rural India.

Rediff had been experimenting with the service for the last three months, and Mr Balakrishnan says the response has been good enough to make it a regular feature.

Buying options

Mr Balakrishnan says buyers in smaller cities had little option when buying books and music, but the Rediff range may just make them click the mouse and order something.

Adding to his hopes is the fact that a lot of India families keep a substantial amount of cash at home.

Industry figures do not provide a very rosy picture of e-commerce in India. In 1999-2000, business worth 4.5b Indian rupees was conducted over the internet.

But the National Association of Software and Service companies (NASSCOM) predicts a 500% growth over the next couple of years and that has most online sellers rubbing their hands in excitement.