No Kotak, Ecommerce CoD is NOT meant to collect interest in savings bank account

Ecommerce companies started CoD to gain customer trust and while CoD (Cash on Delivery) has been debated in various forums, Accel’s Subrata Mitra shared the following with us (read: Interview with Accel’s Subrata Mitra : “part of the reason people use CoD is because of convenience (1-click doesn’t work)”)

“Trust factor would start getting better as some of the players get bigger & create recognizable brands; likewise, more Internet savvy consumers are starting to pay online (since the base was small, its taking a long time to get that # to critical mass). Also, we think that part of the reason people use CoD is because of convenience (1-click doesn’t work). As the segment evolves, so would payments & consumer maturity, and we should be able to get a reasonable balance in terms of CoD vs others.”

Kotak Mahindra bank has taken CoD to a new level by equating it to ‘payment delayed’ option – that is, if you avail CoD, you can continue making ‘interest’ money on your savings account!

CoD = Savings! (Via: Kotak's Facebook Ad)
CoD = Savings! (Via: Kotak's Facebook Ad)

Well, you cannot blame Kotak Mahindra bank for this ‘lack of understanding’. Ecommerce companies started the trend and now banks too have started recommending customers to not avail online payment option.

What’s the way out? Should companies start charging extra for CoD? Sharing K. Vaitheeswaran, CEO of Indiaplaza’s views (from an earlier interview)

There are no free lunches. CoD costs money, we pay this amount to service providers and we have no choice but to pass it on to consumers who wish to avail of this service. CoD in my view is a very inconvenient payment option for consumers and merchants and we encourage our customers to pay online. Over 95% of all orders on are paid online; less than 5% are paid through CoD. This also reflects the high trust factor consumers have on Indiaplaza. Normally customers prefer CoD on sites where they are unsure of delivery.

Thoughts? Are customers to be blamed for their lack of interest in buying things online (read: Why Indians do not buy online)?

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