IMPACT of 500-1000 Ban on Cash on Delivery Orders

Ecommerce companies in India have stopped accepting cash payments for a while as the country has made currency notes of Rs 1000 and RS 500 invalid as an effort to control black money. The two biggest ecommerce giants Amazon and Flipkart have stopped accepting COD for making orders on their platforms. While the website of Amazon does not provide the option to pay by COD, Flipkart shows a message to customers about non-availability of payment mode. On the other hand, Snapdeal, also shows a message telling customers about the scrapping of currency notes. While almost all ecommerce companies showed significant reductions in COD orders during the recent festival season, most of sales on these mediums continue to be done by cash. It has been told by snapdeal that cash based orders had brought down to fifty percentages during the five day sale in the start of October.

All the snapdeal users who have placed COD orders can pay for their deliveries with any currency notes other than 500 and 1000 rupees notes. Users are also left with the option to defer the delivery for few days until new currency become available. Ecommerce players have restricted new COD orders to 2000 rupees in order to make it comfortable for the delivery personnel and the buyers. The cash on delivery limits will be increased gradually in next few days. Other services such as UrbanClap encourage its customers to employ the online payment option. It invites customers to book their services and pay online securely. However, it is difficult for marketplace businesses like this service to completely fathom the great impact brought about by this move currently. Yumist, the food delivery service also encourage its customers to make use of wallet service.

The other food delivery service called Box8 has fully eliminated the cash on delivery option, allowing users to choose from wallet, net banking and card. The other food-based services like Swiggy and Zomato have stopped the COD payment option. Uber, as well, made a service announcement for its customers that cite currency notes of 500 and 1000 rupees are no more valid and Uber driver won’t be accepting these notes. It asked its customers to carry currency notes in small denominations to pay for the tip.

It is anticipated that a lot of people throughout the country will reject COD deliveries. The brunt of which will be taken by ecommerce sites and their vendors. Thinking that India still serves a large COD market for these sites, it needs to be seen how they will take the hit. Experts are in the view that real estate, ecommerce and consumer non-durable sectors are possibly to be hit by the move taken by government to ban 500 and 1000 rupees notes, even they estimated the economy to experience favor in the long run.