E-commerce site Snapdeal will launch its own payment gateway to serve Indian merchants and consumers within the next few months, aiming to reduce consumers' use of paper cash.

Snapdeal's addition of payment gateway technology follows the lead of Flipkart, a similar online shopping site in India. In July, Flipkart began using PayZippy as a payment gateway for online merchants.

The Snapdeal decision comes at a time when rumors are circulating through India that eBay plans to acquire Snapdeal, according to a report from Medianama, which covers digital media news in India. EBay operates its own payment gateway through its PayPal subsidiary.

EBay, which is an investor in Snapdeal, already has a cross-promotion partnership in place with the company, the report says.

Initially, Snapdeal's gateway will authorize credit card payments and process them through a user's bank account. Snapdeal reports it has 20,000 sellers transacting on its marketplace, offering about 500 product categories.

Other companies are seeking to change the cash-paying habits of Indian consumers.

Mobikwik launched its mobile wallet in September with the backing of Reserve Bank of India.

In addition, Visa and Monitise launched its Movida mobile payment joint venture in July, entering a deal with ICICI Bank in India to offer the service to its customers.

Reserve Bank of India has estimated that consumers are using cash for 90% of payments in the country.

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