How India is Moving From Cash to Digital Payment on Delivery

Any substantive change needs time to settle into a practice as India’s digitization process is witnessing. This is particularly true in the case of digital payments for online purchases. Indians have always been most comfortable handling hard cash and making direct one-on-one transactions. There was also a trust issue – buyers were uncertain of receiving exactly what they ordered online. Sure enough, the cash on delivery (COD) option became highly popular even as eCommerce took root.


However, several challenges to the COD way of life have always been apparent. First, there is the inconvenience for the buyers as they need to be physically present to receive the goods and they also need to arrange for that sum of cash. Secondly, there is the increased effort of the logistics players to collect, store, and secure the cash. For the online retailers, the challenge is that they get credit late and also suffer from a greater proportion of returns for COD purchases.

It was clear that if the buyer could be given the confidence that what they ordered would get delivered, then all the players in the ecosystem would enthusiastically shift away from Cash.  As this confidence has risen, and as consumers have become digital in other facets of their life the digital payments have grown. According to Amazon India, approximately 55% transactions during its Great Indian Festival last month were a mix of net banking and debit and credit card payments. Reports are that Paytm offered cashback for digital payments for its Paytm Mall, resulting in less than 1% COD orders.

The real credit for the growing acceptance of digital payment on delivery by the consumers goes to the conscious efforts taken by the retail giants to improve the overall delivery experience, making it more transparent and trackable. They have also incentivized digital habits through cashback options for digital wallets, discounts on using credit and debit cards, offers from banks for easy installments, and even improved payment gateways. Return policies have also been altered to suit the needs of both consumers and the sellers. Even with the payment being digital, refunds can be processed faster. Increased mobile transactions too have made the use of digital payments popular.

The conditions are ripe for a digital transformation of India’s payments. June 2017 estimates are that 420 million consumers in India were using mobile devices to connect to the internet. Digital Wallets are gathering speed and perhaps most crucially Government-backed payment options like UPI, Aadhar Pay, and Bharat QR are driving acceptance of digital payments across all sections of society. The next stage of India’s eCommerce story will be a digital payments revolution.

Clearly, opting for digital payment over COD provides relief to both the buyer and the seller. In fact, with the festive season just around the corner, every effort is being made to make digital payments even more attractive. And this can only be to the good of the Indian consumer and ecommerce retailers.

About Phi Commerce

Phi Commerce are seasoned payment professionals. The core team has more than 150 years in retail payments domain across 25 countries globally. The PayPhi solutions from Phi Commerce empower business enterprises in creating simplified and frictionless payments experiences for their consumers. Underpinning all Phi Commerce solutions is the PayPhi Transaction Gateway, an omni-channel gateway which incorporates all elements to make payment solutions easy, effective, and secure.

PayPhi eCOD is one its kind solution which allows consumers to opt for COD at the checkout however convert COD to eCOD at the time of delivery of goods by way of digital payments. This solution provides consumers a simple, safe way to digitally pay from anywhere, only on delivery of goods, using any payment mode, from any device with last mile payment notification to the delivery boy. The solution offers an alternative to costly mPOS-based solutions, helps overcome mPOS issues of scalability, transaction failure & maintenance.

The effective nature of this service has resulted in it being rolled out to consumers of over 200 e-tailers across 5000 PIN codes within 6 months!

Inputs by By Mr. Jose Thattil, CEO, Phi Commerce


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