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E-commerce companies are struggling to handle cash on delivery orders, following the government’s decision to demonetise Rs 500 and Rs 1,000 currency notes, with firms like Amazon and Paytm temporarily halting the facility for customers.
Some companies like Uber and BigBasket have issued advisories urging customers to pay in lower denominations, while others like Flipkart and Snapdeal have set limits to the value of orders that can be delivered through COD.
According to industry estimates, about 70 per cent of the shoppers opt for cash while buying a product.
“We have temporarily stopped cash as a payment option for new orders. Customers who had already placed COD orders before midnight 8/11 can pay for their orders using debit or credit cards or currency of valid denominations (at the point of delivery),” an Amazon India spokesperson said.
The official added that the company is working on alternatives to make doorstep payments easier for customers by introducing a variety of electronic payment options for future orders.
Flipkart and Snapdeal have capped COD orders to Rs 1,000 and Rs 2,000 respectively, and asked customers to pay using lower denomination notes.
Shopclues CBO Radhika Aggarwal said the company is accepting COD orders upto Rs 999 in government-approved denominations.
Saurabh Vashishtha, Vice President at Paytm, said the company has also temporarily disabled COD orders to avoid inconvenience to consumers at the time of delivery.
He added that over 98 per cent of items bought on its platform are through wallet and other pre-paid payment instruments.
While customers of Flipkart will be able to pay for their orders in cash, the Bengaluru-based company has set a limit of Rs 1,000 on the same.
“We are no longer accepting COD payments in Rs 500 and Rs 1,000 currency notes. In order to enable customers to conserve smaller denomination notes for daily essential use, we are restricting COD on orders below Rs 1,000,” the spokesperson added.
They added that customers are being urged to opt for alternative payment modes like internet banking, credit and debit cards, gift cards and PhonePe wallet.
“We are also working on a slew of measures to help customers easily transition from cash to digital payments,” the spokesperson said.
Snapdeal said it will give its users the option to defer the delivery by a few days till new currency notes become easily available.
“Also, as an interim measure, we have restricted new COD orders to Rs 2,000 to make it convenient for the buyers and delivery personnel. The COD limits will get increased gradually over the next few days,” a Snapdeal spokesperson said.
Autorickshaw aggregator Jugnoo said post the announcement, it has stopped accepting Rs 500 and Rs 1000 notes. But since over 70 per cent of its customers prefer cash payment, it has started pushing for other mode of payments to deal with the situation on hand.
According to a consumer research conducted by RedSeer, nearly 70 per cent of customers buying goods online pay through COD mode with maximum mileage coming from tier I and II cities.
Sreedhar Prasad, Partner (E-Commerce and Start-ups) said the decision to discontinue Rs 500 and Rs 1,000 notes could impact the number of new orders for e-commerce companies from Thursday till the fresh currency is out.
He said many online customers use wallets more because of cashbacks and convenience than for not having another digital mode of payment like cards/online transfer.
He added that over 30 lakh orders in the pipeline to be delivered as COD from Thursday.
“Unless an immediate ‘wallet pay on delivery’ model is devised, many of them may get cancelled, or clog the logistics network with significant delays in delivery. Many customers may still be hesitant to adopt wallets in a short span of time,” he added.
Craftsvilla CEO Manoj Gupta agreed. “E-commerce companies that see a huge chunk of payments happening through CoD mode will face some challenges in the initial few days. In the long run, this move will only bring about positive changes,” he added.
IT industry association Nasscom has said the withdrawal of the old high-denomination notes will accelerate the push towards electronic payments.
“This is a welcome move for the e-commerce industry, where a large number of deliveries in India are COD, raising logistics costs and risks,” Nasscom said.
While other reasons for use of cash may take longer to alleviate, the present announcement could mitigate a significant factor driving COD -- availability of unaccounted cash, it added.