Amazon, Flipkart stop COD orders after Modi scraps Rs 1,000 notes

While Snapdeal has asked customers to keep right denominations handy for payment at delivery

Indian e-commerce companies have stopped accepting or discouraging cash payments for the time being as the country has banned currency notes of Rs 500 and Rs 1,000 in its efforts to curb black money.

The two largest e-commerce players Flipkart and Amazon have stopped accepting cash on delivery for orders on their platforms. While Amazon’s website does not offer the option to pay by cash, Flipkart is showing customers a message of non-availability of payment mode.

Rival Snapdeal, on the other hand, displays a message informing customers of the scrapping of currency notes. “Current currency notes of Rs 500 & Rs 1,000 have been discontinued. Please keep the right denominations handy for payment at delivery,” the company says on its website.

While all e-commerce players showed significant reductions in cash-on-delivery orders during the recent festive season, majority of sales on these platforms continue to be made by cash. Snapdeal had said that cash orders had dropped to 50 per cent during its five day sale at the start of October.

“Both Snapdeal and FreeCharge are committed to supporting all such initiatives,” said Kunal Bahl, co-founder and CEO Snapdeal, in a statement.

During the festive sales, e-commerce companies saw nearly two-thirds of sales coming from tier 2 and tier 3 towns where digital payment penetration is still low. The ban on cash payments will affect sales from smaller towns in the short term.

In the long term, digital payments could replace cash, but e-commerce companies say they could face a short term dip in sales and also large number of returns from customers who’ve already placed orders with them.

Despite the move hurting e-commerce in the short term, most companies have come out supporting the government’s move. Vijay Shekhar Sharma, founder and CEO of digital payments firm Paytm said “The biggest, boldest and most ambitious surgical strike by any government in the world,” in a Tweet.

Cash-on-delivery might have been one of the reasons for India’s e-commerce boom, but was also one of the biggest drains on the margins of these companies. Handling cash has been expensive for e-commerce firms and they’ve been among the strongest advocates of digital payments in the recent past.