However, the number of transactions through Unified Payments Interface (UPI) has seen a steady increase in the last one year. Data from GoKwik shows that 64% of all orders were placed through COD in the second quarter of 2022, although preference for UPI has also increased by about 20% in the past year.
“The transactions done on our network in the last one year clearly show that COD is not going away anytime soon, but customers are also getting comfortable to use pre-paid options. The increasing penetration of mobile phones And with faster internet connectivity, the preference of customers to pay on D2C websites through UPI is increasing year on year.This trend is also attributed to the many interventions we have launched at our checkout to improve prepaid conversions. Can go on,” said Chirag Taneja, Co-Founder and CEO, GoKwik.
GoKwik helps D2C brands increase their conversion rates, reduce original return (RTO) and to improve the realization of Gross Merchandise Value (GMV). Indian e-commerce merchants have always faced the challenges of low trust in Indian consumers as compared to their global counterparts, and the data on the GoKwik network backs this up.
Average order value has been higher for COD as compared to UPI, indicating that there is still a lack of trust in e-commerce websites that prevents customers from buying high valued items through prepaid payment modes. Mobile users had the lowest preference for UPI at 15.6% in Q2 of 2021, which more than doubled to 36.7% in Q2 of 2022, but was still lower than desktop users at 42%.
This trend is another unique challenge for Indian e-retail traders as compared to mature markets of US and Europe, the report said. This leads to the problem of impulse buying which usually happens through COD payment mode. This further results in India specific problems of RTOs, which can constitute up to 30-40% of all COD orders for traders, affecting their bottom line.