90 pc of Rural India's E-commerce Orders Paid in Cash
90 pc of Rural India's E-commerce Orders Paid in Cash

Cash has remained the common mode of payment for online shopping in India, especially in the country’s hinterlands. In fact, in 2020, nearly two-thirds of online sales were paid in cash, up from nearly half three years ago. 

This is mainly because e-tailers expanded into the country’s rural areas (untapped customers), nearly 90 percent of the new buyers pay through the ‘cash on delivery' (COD) mode, according to a study by cash handling firm for banks CMS Infosystem. 

“Indians prefer to buy online, but when it comes to payment, they prefer to pay in cash,” said Rajiv Kaul, Executive Vice-chairman, CMS Infosystem. “Between 2015 and 2020, the market has more than quadrupled in terms of dollar value owing to the prevalence of shopping at online giants. COD is the most used payment method for e-commerce transactions in India.”

In 2020, along with e-commerce retailers’ expansion into Tier-II to Tier-1V cities, COD constituted more than 65 percent of all e-commerce payments, indicating the significance of cash for payments in this sector, the study further stated. 

Specifically, COD payments become more prevalent as we move from metropolitan regions to semi-urban to rural areas of India. In the metro areas, approximately 50 percent of all online transactions are paid through the COD mode, while in Tier-II regions the corresponding figure is approximately 70 percent and reaches a peak of 90 percent in Tier-IV regions.

Experts believe that two factors lead to this spike in COD mode of payment. First, people in the rural areas are yet to adopt the popular non-cash payment systems like cards, digital payments and internet banking. Second, these customers want to see the product they are buying before they make the payment, industry veterans said.

 
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