What offline and online E Commerce Payment Options are available in India?

Grocery E Commerce Offline and Online Payment Options India 1

India is one of the fastest growing e-commerce markets in the world. The last challenge that remains is a good experience for Mobile Users accessing E-Com sites. Once that is overcome the market will boom for millions of “Mobile Only” internet users in India who will drastically switch from “online store browsing” to reaching the payment page and doing the transaction online!

This article gives detailed guidance on what are the possible payment options for Indian ecommerce sites and why such options are required; and weather they suit your site.

Shopping Cart

On an ecom site; once you browse through various categories and buy multiple products. E.g. At our Art Portal; you buy a sculpture for $100 from “Sculptures” category and a Decorative Tray from Home Decor/Home Accents category for $10… you then proceed to checkout; where it displays a total of $110. This displays your shopping cart. Here you add various options like:-

  • Apply a gift voucher: Your friend has gifted you a gift voucher for $10; bringing down your total to $100
  • Apply discount code: Within the site or externally you apply a $5 discount voucher (e.g. DISC2304)… enter the text… and net new total is $95
  • You click checkout

Payment Options

To get this page; you need to tie up with a Payment Gateway provider in India. Once you tie up with them you need to technically integrate your site with the Payment Gateway; this will be done between your tech team and PG Tech staff. The last step remember is to obtain the key salt (sort of passwords which authenticate your account) from the PG Vendor. Some of the good PG Vendors in India are PayUMoney, Bill Desk, CC-Avenue and others. Choose one which has zero upfront investment; though their transaction fee may be as much as 2.9%…. however this is better that paying them a one time fee for e.g. of Rs. 5000

The next page shows you the payment options page. Following are the Payment Options you should consider building in your site and its pros/ cons. The Payment Options can be

  • Prepaid – Provided by PG
  • COD (Cash on Delivery) – Provided by you
  • EMI – Provided by PG + Bank Credit Cards
  • Part Payment – Provided by PG + You
  • Online Transfer – Provided through Internet Banking
  • Offline Payment – Done by the consumer through actions outside the internet


As an E-com owner this is obviously your best option for your consumer to select; as its prepaid and the money will hit your bank account within 2-7 days. Within prepaid also there are several sub-categories; these are:-

  • Credit Card: This is the preferred method by Prepaid consumers as they buy now pay later
  • Debit Card: Preferred by many who want to pay “instantly” without mounting up credit car bills. Another key reason of debit card usage is they still require simply information on the card like the card number, expiry date and CVV number; which any consumer readily has. While this is less secure; this article is not on security! To know more Cyber Security, check out Best Cyber Security Courses
  • Cash Cards/ Pre Paid Cards: Other types of cards you can consider
  • Pay by “Speciality Payment Vendors”: These are new specialist ecom start-ups in India which offer consumers as additional discounts or other benefits by choosing such payment options. Examples are “Pay by PayUMoney” or “Pay by PayTM” …. google and learn more
  • Net Banking: This is preferred by millions of users who are veterans of net banking and they do their bill payment, railway and airline booking via this; hence will use this option for ecom as well. The big advantage is net banking is highly secure and uses two factor authentication (mandated by India Banking Regulator RBI). Security buffs wanting to know more about two factor authentication can read my post here

While noting all of the above; remember you need to check out in detail on the availability of all of the above options with the PG Vendor. Don’t get frustrated if they are irregular in their replies as they are currently overloaded with enquiries with thousands of Indian ecom start-ups knocking on their doors!

COD – Cash on Delivery

A known fact is that COD accounts for 60-70% of ecommerce payments in India. Hence this is a “must have” payment option on your site. Remember COD is popular because thousands of consumers do not have a net banking account or they of course have a credit/ debit card but don’t trust the internet; which they are right as far as using just a CVV goes! There are other reasons for COD e.g. buyers want to look at / feel the product before handing over the money. However the ground realities for this (based on my discussions with leading e-com players) are as follow:-

  • When you elect a COD and you order for e.g. a Red Glass Vase. The courier boy rings your bell. You need to accept the package and pay him the cash. You are not supposed to open it, check the contents etc.
  • Even if you do decide to open the package and inspect the vase. You find out that the vase has some flaws. Or you see that it’s a Green Vase. Even then you are expected to accept the package and pay the cash. Remember to take an invoice… a physical invoice is mandatory for courier companies. In the case of a flawed vase or wrong color vase you need to follow the return policy of the e-com vendor; for which you will call their call centre or email them
  • Note that consumers who take the package and don’t pay up the cash to the courier boy; this will be informed back to the ecom company who will file a police complaint against the consumer; hence this should never be done
  • It is always possible that when the consumer opens the door; he tells the courier guy that he has changed his mind and doesn’t want to buy. Consumer doesn’t pay up and the courier guy returns to office with the product. Hence this is a loss of sale for you. Hence does that mean that you should not opt for COD? Definitely not! You must keep COD as an option and the next section explains that your losses are very minor and worth the risk

Losses from COD (Cash on Delivery)

As mentioned above; consumers cannot take a package and refuse to pay up otherwise they will face the police. However in the last scenario above; consumer did not take the package and the courier boy returned to office with your product. So what is your loss?

I am assuming your ecom site is a market place model (same as flipkart) with zero inventory. Market place model is where you will tie up with hundreds of suppliers and display their products by just taking their product images and product details but not taking their inventory. So in the COD non payment scenario what is your loss?

  • Lets also assume this: Your Supplier is in Kolkata, your consumer is in Bangalore; and you are in Mumbai
  • When a consumer places order for e.g. a Red Ceramic Vase… you in turn will raise the PO with the Supplier. You would have a logistic partner (LP) tied up to take care of the pickup
  • LP picks up the vase from Kolkata Supplier. Further the LP may optionally provide Fulfilment Services also (checking if the product ordered matches the product supplied, product defects, product repackaging for national travel)…. for this discussion let’s assume Fulfilment services are not provided
  • Hence for your Cost 1 is LP picking up from Kolkata Supplier and bringing to his Warehouse
  • Cost 2 for you is LP transporting it from Kolkata to his Bangalore Hub and from there delivering to the Bangalore Consumer
  • Consumer doesn’t take the package and doesn’t pay; LP returns to his Bangalore Hub
  • LP then sends the package the same way it came…. back to the Supplier at Kolkata. This is cost 3
  • Note that the cost of these three together might be a mere Rs. 100-200 if its a small product; hence you can take a chance with COD. Remember the Vase was returned to its supplier – hence you did not face any loss for the product itself
  • Also checkout transit insurance providers especially for goods costing more than Rs. 10,000

How does the COD get credited to you?

COD is a service provided by the Courier/ Logistics partner you tie up with. Some of the Indian specialist e-com logistic providers are Delhivery and GoJavas. They charge approximately 3% for the cash they collect on their behalf. Even big players like Blue Dart (acquired by DHL) offer COD collection. Once collected it hits your bank account within 7 days. Look forward to our next article on Logistics for E-com in India!

EMI – Equated Monthly Instalments

These are facilities provided by Banks through their credit, debit cards and also by consumer finance companies like Bajaj Finserv Lending. Hence all these tie ups are usually through the PG vendor or maybe if PG advises you need to tie up with them separately.

EMI is very much necessary for your site to succeed. Reason being: If you are buying at our site www.artbugs.in a Decorative Tray of Rs. 3000; you might go for a Pre-Paid. However for a Sculpture worth Rs. 50,000 we will not offer a COD. But since we want you to buy we will offer you an EMI; where 50,000/8 installments = Rs. 6300 per month x 8 months is affordable for the consumer.

Remember as the Ecom owner you will get your Rs. 50,000 upfront and the intermediary bank is financing the EMI.

Part Payment

This is where E-Com companies in India are becoming really innovative. Suppose there is a Sculpture costing Rs. 10,000. Currently you know your credit card has a limit of Rs. 6000. Plus you have Rs. 4000 spare cash in your hand. Then you elect for Part Payment where

  • Consumer pays Rs. 6000 via Pre-Paid (e.g. Credit Card)
  • And balance Rs. 4000 via COD (Cash on Delivery)

This is great as here your E-com Site’s business logic can also decide how much percentage of value you want Pre-Paid and how much COD is OK.

Online Transfer

This is when the consumer is familiar with online bank transfers which are via NEFT/RTGS in India and would prefer this rather than using net banking. Remember the consumer is king; but you are the perfect site for him as you have thought of every conceivable payment option for him; and this might be the one for him

You can display the following page:-

We at www.example.com are delighted to offer you NEFT/RTGS Online payments to all our consumers! Kindly make an NEFT/RTGS transfer to Example.com Bank Account with Details below:-


Branch : Bandra-Kurla Complex, Mumbai


Account Type : CURRENT

Account Number : 12345678901


Offline Transfer

Here you can offer two options. Offline via a consumer visiting his branch or via a cheque being couriered to you.

The displayed page content is self explanatory. Note that there are still many Indians who are familiar with an NEFT transfer via a branch but do not do net banking based NEFT transfers. Hence these options might be required; for our King Consumer!

Offline Payments at www.example.com

We at www.example.com are delighted to offer two options for offline payments to all our consumers!

Visit Your Bank’s Branch

You can visit your bank’s branch and fill in an NEFT Transfer form; and fill in the form. Once done please email us to [email protected] with the transaction reference number given by your bank and we will ship your product at the earliest! We will notify you on email when we get your NEFT credit and keep you posted on the shipment.


Branch : Bandra-Kurla Complex, Mumbai


Account Type : CURRENT

Account Number : 12345678901


Amount : (Please pay the amount as per the final due amount)

Cheque Payment

Alternately, you can courier a cheque as per the final amount due as per our site in favour of EXAMPLE INDIA LIMITED and courier the same at our address below. We will ship your product within 48 hours of your cheque being credited to our bank account.

Example India Limited

123 ABC Towers

11 ABC Street

Bandra-Kurla Complex

Mumbai – 400051


For any queries do not hesitate to call us at XXXXXXX or write in to[email protected]

First published here.

Samir Dahotre

The author is Founder & CEO of PERSPECTIVE Management Consulting. PERSPECTIVE provides Digital Strategy & traditional IT consulting to both large enterprises & start-ups; our clients include the Who’s Who of India Inc as well as several budding ecom and enterprise software startups. We also provide Go To Market Services for tech companies. The author is also Co-Founder & COO at www.artbugs.in

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