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In Nepal, online purchases have undergone great transformation over the past couple years. Once we had to go to the physical shops for purchases, now everything from clothing to vegetables gets delivered to us. Besides the service they provide, online payment options is a huge factor. Is the payment done once cash is delivered to the customer, or is the payment done through an app, eSewa or Khalti, before or after delivery?

For business owners, the stakes are higher. The mode of payment can greatly impact the level of customer satisfaction. While Cash on Delivery (COD) remains a strong preference, there are a few considerations about Digital Payments.

The Reality of Cash on Delivery (COD) in Nepal

In Nepal, the overwhelming preference is COD. They feel more secure transacting that way.

The Pros of COD

Increased Trust: A prevalent fear of buyers is a fraudulent seller. Cash on Delivery takes the fear away.

Lower Barriers of Entry: Not everyone uses a smartphone, or not everyone understands the linking of a nominated bank account to an online app and then using a QR code for payment. COD provides a simplistic process for everyone across generations.

Increased Successful Transactions: "Payment is deducted but Transaction is Not Successful" is a recurrent grievance with the online payment systems. Cash has no technical intermediaries.

The Cons of COD

Possibility of Returns: This is the greatest challenge faced by sellers. Occasionally, customers order products that they do not wish to take when contacted or even after reaching out to them with the rider. This phenomenon is termed Return to Origin or RTO. In such instances, the seller has incurred losses in terms of courier expenses.

Difficulties with Handling Cash: A considerable amount of cash is required to be carried around by the rider and deposited back into the office.

Delay in Payment: The money collected through the COD system doesn't get to the seller instantaneously because it has to go through numerous hands, such as the customer, rider, delivery company, and bank accounts.

The Rise of Digital Payments (eSewa, Khalti, Fonepay)

These days, digital wallets and QR codes are widely used. From tea stalls to large malls, scan and pay services have become routine practice.

The Pros of Digital Payments

Quick and Secure: If the customer has paid digitally, the payment is secured. There are lesser chances of them backing out since the payment has been made.

Efficient Financial Management: Payments will be quick, thus helping you manage your finances in a better way as a businessman. For example, you can use this money to buy stocks or pay your employees.

Tracking Payments: All transactions are accounted for. You do not have to account for anything by making notes in your diary. Instead, this will all show on your app/bank statement.

The Cons of Digital Payments

Doubts about Trustworthiness: Customers may be skeptical because they fear they will lose their payments even after paying for something substandard.

Limits and Fees for Transactions: You may sometimes face some fees for payments or some limits in payments, depending on your requirements.

Why Do Nepali Customers Still Prefer COD?

Even though the technological advancements we have today provide us with excellent mobile apps, most of the customers in Nepal prefer to use COD payments due to one simple fact called "The Touch and Feel." In Nepal, descriptions available online do not always coincide with the actual characteristics of the products that people order.

Besides, the system of refunds in Nepal works relatively slowly. When making payment via the Internet, one may face delays during the process. In case of COD payment, one does not even make any payment at all.

Best Practices for Merchants: Moving Toward Digital

In case you are a merchant and wish to reduce the risk associated with COD delivery, then there is no need to ban the system. You can gradually move towards digital payment options as follows:

Offering Discount: Inform the customer that he/she gets a discount of 5% or even free shipping charges for using digital payment methods such as eSewa and Khalti. Customers would surely prefer paying digitally in order to avail discounts.

Partial Booking: Ask your customer to deposit some amount such as 200 Rupees through online payment gateway and pay the rest in cash.

Return Policy: If it becomes easy for customers to ask for their refund, then they would certainly go for it. Make sure to mention somewhere on your website that refunds are made within 24 hours.

Courier Company: A responsible courier company should know how to manage cash on delivery and online transactions. You could say that a courier company acts as an intermediary between a customer and seller. If the rider is decent enough, then chances are your customer might feel safe with it.

Future of Payment in Nepal

The tide is turning. Even though Cash on Delivery will continue for a couple more years, digital payment is the way forward. With internet connectivity in all parts of Nepal and banks going digital, “Cash is King” mentality is coming to an end.

The key point for businesses would be to give the choice to the customers. Let the customer decide while making it more convenient for them to go digital. In essence, balancing the trust between customer and business.

Conclusion

Whether you are more inclined towards the traditional method of payment through cash or the modern method of payment through apps, the aim of e-commerce is to ease your life. The only solution for the seller to be successful in the Nepalese market is to efficiently handle COD transactions along with promoting digital growth.

If you started a business in a small town in Nepal twenty years ago, your world was a tiny place. Your customers were the people walking by your shop. If you are lucky enough to live in a picturesque town like Ilam or a village in the remote Karnali region, chances are that you have amazing products to sell. Maybe you have pure organic honey, cozy hand-knit clothing, or fresh tea from the region. The problem was that your business was not going anywhere. You could only sell to your neighbors or the few tourists passing by your town.

Then came the smartphone and internet revolution. The first half of the problem was solved. Today, a college student from a small town can open a shop on social media in just five minutes. He or she can post a photo of their local product, and a customer in Kathmandu will see it in an instant.

But that's just the first part. Then you have to get that physical product from your shop into the hands of a buyer located hundreds of kilometers away. For a while now, this has been the largest challenge for small businesses in Nepal. Now, this challenge is disappearing. It is no longer just about shipping physical goods from one place to another. It is the primary means by which local dreamers are being converted into national brand owners.

The Old Way Versus The New Way

Let us consider just how hard it used to be. For a small business owner, the largest fear was always the delivery part. Consider a buyer from Dhangadhi wanting to buy a handmade jacket from a seller in Itahari. In the past, the seller had to pack the product, then walk or hire a local taxi to get to the bus park. Then they had to find a bus driver going in the direction they wanted. They then had to hand over the product to the bus driver, pay a fee for the service, and then call the buyer to tell them that they should wait at the bus park the next day for the product.

The modern logistics scene has completely changed this picture. If you use a service like ncndelivery.com, you don’t need to worry about bus parks and lost packages. The merchant does not even need to leave their house. They can book a pickup online. Our riders will come to their door for free pick up service, and bring it to a hub. From there, it goes through a planned network over the tricky hilly roads and goes straight to the doorstep. The whole country is your local market.

Building Trust Through Cash on Delivery

Trust is everything in our country when it comes to buying things. Most people in our country are a bit scared to pay for something online before they can actually hold it in their hands and check the quality. That’s why Cash on Delivery is such a popular choice in Nepal.

For a small town entrepreneur who wants to do business all by themselves, the possibility of offering Cash on Delivery to a buyer in a different city is impossible. You can’t drive for five hours just to collect a thousand rupees. But when you have a massive network at your disposal, the logistics company acts as your middleman. At ncndelivery.com, we don’t just deliver your product to the buyer; we collect the cash for you and transfer it back to your bank account. This simple process does three things for your small business: it creates instant trust for your brand. The buyer feels absolutely secure buying from your shop. It increases your sales manifold. Any shop that offers this method of payment can expect twice the number of orders compared to a shop that only allows advance payment. It makes your small business appear like a huge company.

The Face of Your Brand

When you are running an online business, you do not get the opportunity to face your customers face-to-face. You do not have a shop where you can greet them with a smile and give them a shopping bag. The only human interaction you get with the customer is the person who delivers the goods to them and knocks on the door.

This means that the face of your company is the person who delivers the goods. So, if the person delivering the goods is rude, late, or gives the customer a damaged box, the customer thinks that the shop was not professional. However, if a nice-looking person from ncndelivery.com delivers the goods on time, with a clean package, and handles the cash payment nicely, the customer thinks that your shop is highly professional.

Connecting Rural Makers to Urban Buyers

Nepal is a country of small towns and villages. The most unique and high-quality products often come from these exact places. But these places also have the most difficult roads and weather conditions.

Nepal is a country of small towns and villages. The best products are usually produced in those exact locations. However, those locations have the worst road conditions too. 

Let us think of a woman making soaps. She lives in a small town on a hill. If she is selling her soaps to her village, she can sell ten soaps a month. But what if she wants to sell her soaps to big hotels in Pokhara or to beauty salons in Kathmandu? She is stuck.

Lowering the Cost of Starting a Business

It is extremely costly to start a traditional business. To reach a lot of people, you need to rent a huge shop in a metropolitan city like Kathmandu. That means you have to pay huge amounts of money for rent, a huge amount of money for a deposit, and also have to pay for electricity and employees. The fact is, many people simply don’t have that kind of money.

Logistics helps you to start small and save money. You can keep all your products in a room in your house located in the village, where the cost of living is extremely low. You don’t have to hire a delivery boy or buy a delivery van. You can simply use an existing delivery system and only have to pay when you actually sell a product and send a parcel.

If you are not successful with a new product, you don’t have to worry about losing money on rent for a shop in a metropolitan city. You are free to try out new ideas. This is the reason why we are seeing so many young people starting their own brand in Nepal today.

The Peace of Mind with Real-Time Tracking

When you send an expensive parcel, you used to worry for days. Once you handed over your parcel, you would not know where your parcel was until you received a phone call from your customer that your parcel had reached them. The seller and customer were both kept in complete darkness.

Today, technology helps you relax. Every small business can provide their customers with a tracking number. It doesn't matter if you are shipping a small piece of jewelry or shipping a large quantity of clothes, your customer can check their phone and know where their product is. They would be able to know when it left the warehouse, when it reached their city, and when it was out for delivery.

This real-time tracking system saves sellers a lot of time. You do not need to receive angry phone calls from your customers asking where their product is. This system keeps everything clean, clear, and easy to manage.

Conclusion

The concept of doing business in Nepal is evolving at a pace never seen before. It is no longer about having a fast internet connection in Nepal; it is about the movement of goods from one corner of Nepal to another.

When a family in a small town is able to live a comfortable life by selling their products to people all over Nepal, it means that our economy is growing stronger with each passing day. Logistics has transformed the map of Nepal from a collection of disjointed hills into a single, giant marketplace.