Cash on delivery (COD) props up as a hot topic of discussion in any forum where we find two or more executives from Indian e-commerce business deliberating over issues facing the industry.
The national conference on digital commerce, organized by IAMAI, was no different. Everyone on the panel was unanimous in their belief that COD is the most painful payment method for ecommerce players, who were quick to add that ecommerce in India cannot sustain without it.
K Vaitheeswaran, founder and CEO, Indiaplaza.com, was frank enough to admit that the company deliberately makes it hard for customers to find the option of COD (it's true, if you visit Indiaplaza.com, you won't find any mention of COD as a mode of payment on their homepage).
"COD basically helps in building customer confidence. Customers choose COD for the products that are easily available (like mobile phones, games etc) but for products that are not easily available (limited products) or something that they really want, they are more than willing to pay using online methods," he added.
Pawan Gadia, CEO, Ferns N Petals, on the other hand elaborated on the pain points of the merchants in terms of online payments. He pointed out that online payments had a failure rate of up to 70 per cent (for his company) five months back and even though this number is down to 30 per cent now, it is still not good enough.
"Gifting is a spontaneous thing, if there is a delay from either side (if the merchant doesn't receive the money or the customer is not able to make the payment), the complete purpose of gifting is nullified since you can't give a birthday/anniversary gift once the date passes. Hence cash is here to stay, at least for a while," he said.
So what does the cashless payment process industry has to say?
"India is so cash focused that the country is actually taking more time than other countries to adopt cashless transactions. The key is to make customers aware of the safety of cashless transactions," said Dheeraj Bhardhwaj, chief manager- IMPS at National Payments Corporation of India Ltd.
The underlying factors are not difficult to fathom. Electronic payment under utilised as of now, mainly because of low Internet penetration and low number of credit/debit cards (at least in terms of active usage). The safety issue has also not been communicated properly to well educated consumers many of whom are not comfortable adopting even net banking.
The panelists reiterated that the key to promoting cashless transactions is enabling simple technology so that even simple rural folk can use their mobile phone to make payments.
Going forward, digital wallets may play a big role since they work similar to physical wallets and once they are filled, customers don't have to repeatedly put in their personal credit/debit card or net banking details for every transaction. But will consumers like to park their money into digital wallets?