Razorpay introduces e-cash on delivery using UPI

upiRazorpay, a payment processing company, announced eCOD, a new service that lets customers pay for deliveries after the delivery is actually made.

Unlike other recent offerings like Wallet on Delivery etc, Razorpay has built in support for UPI — which means that you can pay directly from your bank account without using any wallet.

UPI, unlike other wallet system, deducts your money directly from your bank account.

The product also supports wallets like OlaMoney, Mobikwik, PayUmoney and Freecharge.

About 70% of all online transactions are estimated to take place using the cash on delivery method.

While tax and black money is part of the reason for the popularity of cash on delivery, the other big reason is trust and ease of use.

Many Indians do not trust an online company to send their items on time after receiving the money upfront. As such, they are more comfortable paying for something only after they get the item in hand.

e-cash on delivery and other similar options tap into this mindset. Since you’re paying only when the item has reached you, you don’t have to worry about getting cheated.

“Cash is difficult to come by and customers want to utilise their limited cash judiciously. In addition, not all online buyers in India are willing to pay first and receive the product,” said Harshil Mathur, CEO & Co-Founder of Razorpay.

“With eCOD, we have attempted to retain the essence of payment on delivery while giving consumers an array of payment modes to pay instead of cash.”

The way the system works is — when the package is delivered to you, you get an SMS from your wallet or Razorpay with a secret code. If you give the code to the delivery boy, your money is deducted from your wallet or account.

It is likely to be slightly different for UPI or bank-account-based payment, as you have to enter your secret 4 or 6 digit pin number for any UPI transaction to work.

“The payment mechanism, will generate a PIN number without internet connectivity or wallet login, that the customer receives at the time of delivery, making the process as simple as paying cash,” Razorpay said.

Razorpay is the second company from India to be selected by the world’s most prestigious startup accelerator Y Combinator, with over 10,000 merchants including the likes of Nykaa, Voonik, Papa John’s, Runnr, Chai Point, Nestaway, Eatfresh, among others.