Amazon suspends Cash on Delivery; Flipkart, Snapdeal put a cap on them

Cash on delivery or CoD forms more than 60 percent of all transactions done on e-commerce portals. But given Prime Minister’s announcement of demonetizing high currency notes, sales across all online marketplaces has been hit badly.

In lieu of the same, Amazon and Paytm have suspended cash on delivery payment option for all its orders while rivals Flipkart, Snapdeal, and ShopClues have put a cap on the order limit for cash-on-delivery orders.

While Flipkart and Shopclues are enabling cash payments for orders less than Rs 1,000, Snapdeal has restricted cash transactions to Rs 2,000.

"We are no longer accepting Cash-on-Delivery (CoD) payments in ₹500 and ₹1000 currency notes. In order to enable customers to conserve smaller denomination notes for daily essential use, we are restricting CoD on orders below Rs. 1000," a Flipkart spokesperson told ETtech. "We urge our customers to opt for alternative payment modes such as card on delivery, Internet banking, credit and debit cards, gift cards, and our easy and convenient PhonePe wallet. We are also working on a slew of measures to help customers easily transition from cash to digital payments," he added.

Notably, no company is accepting cash in Rs 500 and Rs 1,000 denominations. This has led to many cancellations too and is also clogging logistics networks.

Amazon, on the other hand, has suspended cash payments completely. “We have temporarily stopped cash as a payment option for new orders. Customers that had already placed CoD orders before midnight on 8 November can pay for their orders using debit or credit cards or currency of valid denominations. For future orders, we are working on alternatives to make doorstep payments easier for customers by introducing a variety of electronic payment options. We will shortly reintroduce cash payment on delivery,” an Amazon spokesperson said in a statement on Wednesday.

Though the latest demonetization scheme by the government may lead to short-term trouble and fall in sales for online marketplaces, but the move will ultimately be beneficial, since it will eventually lead to the reduction in the number of cash on delivery orders, thereby improving the unit economics in the longer run.