Cash preference in Indian ecommerce back to pre lockdown levels: Thirdwatch
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Fraud prevention platform Thirdwatch, owned by online payment gateway startup RazorPay, on Wednesday said cash preference in Indian ecommerce sector is “almost” back to pre-Covid-19 lockdown levels, with about 65% of customers preferring the cash-on-delivery (CoD) as an option.
The inference was based on transactions data from Thirdwatch’s platform.
Thirdwatch operates an artificial intelligence-driven (AI) platform that uses big data and machine learning for real-time fraud prevention. Razorpay acquired the company in August 2019.
As much as 80% of online shoppers in Indian tier two and three cities, Thirdwatch said, prefer to pay via cash. However, cities such as Mumbai, Delhi, Bengaluru have shown a rise in prepaid orders. CoD as an option promotes higher adoption rates for ecommerce, according to a statement.
Preference for cash on delivery is higher in North-Eastern states -- Manipur 89.6%, Sikkim 88.3%, Assam 87.4%, the statement said.
Citing customers, Thirdwatch said that average cash handling charges can range anywhere between Rs 20 to 50 per order with rising costs in case of returns as marketplaces and logistic companies deduct courier fees.
Since ecommerce businesses face 30% loss due to cancellations and returns, Thirdwatch said it has launched a new app called PrePay CoD, to tackle the problem. The latest product offering will allow ecommerce sellers to share a payment link in advance for the risky or fraud-prone orders, thereby converting them to prepaid transactions.
“Cash on Delivery has experienced a lot of ups and downs over the years and the past six months have been a rollercoaster for everyone… Because the supply chain was severely hit after the pandemic, deliveries are taking longer than usual, and online shoppers prefer CoD so that their money is not locked for the entire duration in uncertainty,” Harshil Mathur, Razorpay CEO and co-founder said.
However, from an e-commerce company’s perspective, CoD purchases come with a certain level of risk in form of the losses arising from order cancellations and Return to Origin (RTO) losses, Mathur added.