At the recently concluded IAMAI/PCI Digital payments conference in Mumbai, Flipkart's payments expert participated and talked about the analytics and surveys they have done to understand how consumers do payments on their portal. It was like a myth buster for many folks in the industry listening to Flipkart's consumer behavior. Clearly Flipkart is doing a great job understanding consumer Psyche. Before I go into details, let me tell you Flipkart's customers do 60% or more transactions through Cash on Delivery.
1) Generally accepted understanding - People dont use credit/debit cards and use COD because either they don't have cards or they are afraid of security of their credit/debit card
Reality @Flipkart - it was found that people who have credit/debit cards still like to do cash on delivery. Even the people who actively use cards on internet and have used it in the past on flipkart still like using COD. It was found through survey/analytics that people do cash on delivery because of ease of use - you have less steps, just few clicks and less info is asked and you are done with the checkout. That's the single biggest reason for cardholders to still opt for it. With 3D secure and two stage authentication people don't have a big issue transaction online.
2) Generally accepted understanding - Transaction failures lead to a lot of lost business Reality @Flipkart - Flipkart found out from their research and analytics that 2 out of every 3 people who got a transaction failure first time, still came back for finishing the transaction on flipkart. He did accept that everybody is largely failing as a true ecommerce player and the eco systems of banks, payment networks is failing, when it comes to payments because 25% or more transactions fail. Its not a good scenario and there is a need to stop that. Perhaps Flipkart's move toward prepaid cards (they applied for a license) is one such step. Its being found that prepaid results in much lesser failed transactions.
3) Generally accepted understanding - COD costs are killing ecommerce players. Its a high cost and so COD is a necessary evil for Ecommerce players.
Reality @Flipkart - Many people just look at one aspect of COD when comparing the cost of delivery against credit/debit card transactions. COD costs should be comparable or little more than debit card transactions when you also take into account failures of transactions and associated processing costs. Credit cards taking into account other total cost of completing checkouts would be much cheaper. But you have to do COD as an Ecommerce business in this country. That's what consumer behaviour clearly indicates. And its not so bad as compared to other mediums for the business in this country.
Other points discussed in the panel by Flipkart expert and other panelists were: - Indian online businesses have to do better. Don't ask in your online form for the consumer that whether its a debit or credit card. Whether its visa or MasterCard. Those should be auto captured. Make it easy for them.
- In Ecommerce EMI payments are growing. Its a hot option for consumers and the support from banks and credit card companies has been great. Consumer behaviour clearly demostrates a liking for this option
- Payments through Mobile will be the next big thing for India. It can be highly secure as IMPS has shown with mobile number itself acting as one of the identifiers. And MMID based merchant payments now allowed it could mean that mobiles can be used for online (remote) and offline (proximity payments). Add to that things such as fingerprint, biometric and Aadhaar based authentication could only take the mobile payments forward. Globally the use of sound waves, NFC and other technologies of mobile payments is picking up. It will be interesting to note the developments in India where huge mobile subscriber base exists and more people access internet via mobile.
Flipkart truly amazed the audience with payments findings on online payments through their study.
Stay tuned for more payment news, analysis and startup stories on Lets Talk Payments.