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Effects of Demonetization on E-Commerce & Online Payments

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Demonetization is the hottest new topic in the country. Financial analysts everywhere are talking about what the long-term impacts could be while several businesses and people are caught up in the unprecedented cash crunch that has been caused. With the retail businesses taking an all new dimension thanks to the growth of the internet, the business models and the payment methods have all changed. And this complex model is now further complicated by the introduction of demonetization. Though it is true that this can lead to a more positive effect in the long term, talking about the short term effects, it has been predominantly adverse for the customers and businesses.

Online money transactions and digital payments are not as difficult as they were before. This makes it easy for you to smartly tackle the sudden ban on old currencies. And online transactions do come with a lot of benefits. This is the right time to unleash the full potential of your debit cards. Make online payments, apply for easy loans, pay all your bills and do a lot more with just a debit card.demonitization

How has demonetization impacted the e-commerce industry?

Flipkart, Amazon, Snapdeal and many other online shopping sites are ruling the retail segment. These e-commerce sites, however, took an unplanned spike in their revenue soon after the implementation of the ban on the higher denomination currency notes.

  • Undelivered Orders:

Most of the orders that were placed with the cash on delivery option could not be delivered because the online retailers could not accept old notes. All the overheads and the costs incurred in shipping the orders go a waste in case of undelivered orders. This is indeed a significant loss for the e-commerce players.

  • Suspension of COD Orders:

Some of the retailers temporarily suspended the option of paying with Cash on delivery (COD).

  • Reduction in a Number of Orders:

As a major chunk of orders placed on the online sites is paid with cash on delivery, demonetization had a detrimental effect on the number of orders placed. People only had to wait to get their old currencies to be exchanged and few of the customers are skeptical about online payments. This lead to a notable surge in the number of orders placed on the online shopping sites.

  • Short-term Impact on E-commerce Partners:

Stagnant goods, returned undelivered orders, reduction in the cash flow, all together came as a severe blow for the e-commerce partners. But economists, as well as the e-commerce business sectors, believe that this effect is a temporary one and that the long-term impact is going to make things better for them.

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Patching up the void

Though the situation cannot be fully rectified in one go, e-commerce retailers could take certain steps to make it easy for the customers to make their payments and thus, in turn, help their own businesses as well.

  • Expand the payment options available:

Besides payment through internet banking and debit or credit cards, mobile wallet payments are great too. E-commerce sites can start adding more options of payments and payment through popular mobile wallets too.

  • Increase the number of POS terminals:

Currently, the number of POS devices are pretty low in relation to the number of online orders made. By increasing the number of POS devices, e-commerce players can make it convenient for the customers by allowing them the security and convenience of COD orders. This, in turn, would reduce the number or undelivered orders for the online retailers thus making it a win-win situation.

  • Lucrative Discount Options:

Several retailers also ran attractive promotions and discounts so as to encourage people to place orders.

  • Go Cashless to make Payments:

Online retailers also have introduced impressive discounts for all the cashless payments. This encourages more customers to choose a payment method other than COD and claim their discounts and in turn helping the e-commerce businesses retain a reasonable cash flow.

The Impact on Online Payments:

If there is one thing that has been growing at a good pace after demonetization, it is online payments. Rather than being tied up in the cash crunch and standing in the never ending ATM queues, more people switched to online payments. There has been a rise in the number of debit and credit card transactions. Even smaller vendors have introduced cashless payment methods.

Tackling the cash crunch by tapping the potential of online payments:

  • There has been a significant growth in the mobile wallet sector. Transferring money as well as making payments for online orders is easy with mobile wallets. More people have begun to fill up their mobile wallets resulting in the growth of the mobile wallet providers like Paytm, Mobikwik and more.
  • Unified Payments Interface (UPI) will see a steady growth. The support of the government has also been in favor of promoting UPI for online payments.unified-payment-interface-upi-e1479351981389
  • The first main benefit is the freedom to choose an EMI option for your bigger purchases. If you purchase a smartphone or laptop on EMI, you short-term financial strain would be less.
  • Banks like ICICI have introduced debit card EMI option for mobile and other purchases. This can also benefit customers making online purchases without a credit card. imagine being to purchase all high-end smartphones and laptop on EMI even without owning a credit card!
  • You could choose to purchase all the gadgets, furniture and appliances you have always hesitated to purchase due to your financial constraint through online loans and pay easily with your debit card. These micro-loans are paid through your debit cards and thus make it easy for you to purchase any gadget say like iPhone 5S on EMI without a credit card from any of your favorite online

Online payments are quick, hassle free and time saving. And EMIs are the best part about online payments. This avoids causing a financial strain when you make a large value purchase. Know how easy it is to get instant loans for all your appliance, furniture and gadget purchases. So do not let the ban on currency notes of higher denominations stop you from buying all that you wanted.

  • Digital-Marketing

  • There is 1 comment

    • 2 years ago

      Rahul   /   Reply

      This is an issue that I have been completely unsure of as a blogger. Should I have a Google Places for example?? So thank you for bringing this up.

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