PayUPaisa has recently launched a new payment option called – ‘Release on Delivery’ for merchants, with this new service, prepaid payments will be be released to merchants only after customers’ nod.
It’s a prepaid medium to accept online payments and as claimed by the company it helps to reduce COD expenses by almost 4 times.
COD constitutes about 60% of the total transactions done on eCommerce stores.
Average cost per COD transaction borne by a merchant is 8% to 10% (as compared to an online transaction which costs 2% to 2.5%). Thus these COD charges cut the margins for the eCommerce firms.
With this it also involves direct and indirect costs, even for order delivered via COD, third party courier companies charge a cash handling fees, which varies from INR 15 to INR 35 for a delivery of INR 1000 (1.5% to 3.5%), plus returns also adds up to the cost.
It’s often to be considered that users who opt for COD cannot have access to online payment, according to an internal survey done by PayUPaisa more than 35% of users who select COD, can actually pay online. Further, 75% of these users choose to do COD as they want to see the product before paying and rest 25% do it because of convenience.
How does Release on Delivery Payment model work?
On the payments page buyer can select ROD payment method and pay through Credit card, Debit card or Netbanking.
Buyer’s money is kept with PayUPaisa and is not released to the merchant in the first go. Only when buyer informs PayUPaisa to release the payments, then money is transferred to the merchant and in case if PayUPaisa doesn’t receive any confirmation from the buyer in 3 days after the product delivery, the payments are released to the merchant by default.
But in case buyer faces a problem with the delivered product, then the user can raise a quick dispute with PayUPaisa’s dispute resolution team. The team will resolve the dispute in an unbiased way so that the buyer does not face any financial loss. As said by the company the dispute needs to be resolved in maximum 12 working days and PayUPaisa refunds back the money to the buyer if the dispute is found to be genuine.
A similar payment model is followed by PaisaPay on eBay India, where the user makes a prepaid transaction at the PaisaPay gateway, and the money is released to the vendor only after the customer confirms the delivery of the order.
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