Digital payments accounted for about 40 percent of the online sales during the recent festival shopping spree, reflecting the growing preference of online shoppers to pay electronically, e-commerce operators said.
“Close to 40 percent of the entire sales volume is now paid for by bank cards and eSewa wallet. This is a significant increase compared to the same time last year when the contribution was only 13 percent of total sales,” Lino Ahlering, managing director of Daraz, told the Post.
“In fact, 45 percent of the total 11.11 sales were paid through debit or credit cards and eSewa. This is huge for a country like Nepal where cash on delivery used to be much more popular in the past,” Ahlering said.
Amitesh Roy, chief commercial officer at Sastodeal, said that more than 40 percent of the transactions were made through digital payments as people preferred contactless delivery. They were also encouraged by consumer focused incentives.
According to him, convenience, safety, especially in the context of the pandemic which made consumers want to avoid handling cash, discounts offered by partner banks and e-wallet, and ongoing education on digitalised payment are the major reasons for the growing customer preference for digital payments.
Anil Sharma, executive director of the Nepal Bankers Association, said that there was a significant growth in the number of mobile banking customers. “One-third of the bank account holders in the country now have access to mobile banking. Nearly 10.15 million out of around 30.25 million account holders are using mobile banking services,” Sharma told the Post.
“This kind of growth used to take four-five years before the pandemic hit the country, but now the number of people using the service increased rapidly within five-six months,” Sharma said.
The habit of banking and conducting other transactions from home increased after Covid-19 as social distancing became the norm due to fears of infection.
At the same time, digital payment infrastructure was up and running, which allowed people to easily switch from paying cash to paying electronically.
“Customer apprehensions regarding digital transactions have disappeared, and they also found it more convenient,” Sharma added. The bank offered attractive schemes for customers making transactions through digital mode.
“Digital payments during this festive season saw a 120 percent jump compared to cash on delivery,” Roy told the Post.
“Last year, only 10 percent of the transactions were made via digital payments. The massive growth in digital payments was made possible by digital payment options from scan to card payment to e-wallet with attractive festive offers,” Roy added.
Consumers preferred a contactless shopping experience from a safety point of view with scan and pay or pre-payment instead of cash on delivery. “The partnership between e-commerce platforms and the digital payment ecosystem and offers encouraged people to choose online payment,” he said.
The cash back offer on pre-payment also spurred consumers to go digital, Roy said. The entire digital payment system, such as digital banking and e-wallet, was aggressively supportive of offering cash back and discounts. Consumer awareness also boosted digital payments during this festival season, he added.
While digital payments have been spreading rapidly in the Kathmandu Valley, customers elsewhere in the country are only slowly getting used to paying electronically.
“Though the gap has been closing thanks to the efforts of various banks, a lot of work still remains to be done to ensure bank cards are activated for online transactions by default, and to educate customers on using their debit or credit cards safely online,” Ahlering said.
According to Roy, digital payments outside the valley were recorded at 30 percent of the total transactions. Digital payments are not so popular outside the valley, but consumers are gradually adopting the new system.
The partnership between the e-payment and e-commerce boosted transactions by more than 40 percent during this festive season with cash back offers and discounts, said e-wallet service providers.
Similarly, small traders who are operating both physically and digitally are coming with digital payment options due to customer preference, which has also contributed to a growth in business.
Roshan Lamichhane, chief operating officer at eSewa, said that rapid adoption of digital payments can be observed in e-commerce. Following increasing demand for online delivery, digital payment companies also came up with offers which helped e-payment service providers to expand.
Offers lured customers to use the service, he said. Cash back offers encouraged consumers to shift from cash on delivery to online payment. “The adoption of digital payments has been growing in the past few months, and e-commerce has also become easy,” he said.
Customer readiness to pay digitally has increased compared to a few months ago, he said As consumers are price conscious, they are ready to make purchases digitally and pay digitally if there are good offers like cash back on fast selling products.
“If quality products are provided at a reasonable price by tying up with a digital method of payment, then it would not be hard for e-commerce to operate as before,” he said.
The practice of e-wallet payment has been growing by double digits monthly. During the festival season last year, the number of users was around 2.2 million. The figure now has reached 3.8 million. “Digital payment awareness swelled after Covid-19 hit the nation,” he said.
Though the business of utility payment and other activities decline during festival holidays, this year B to B transactions increased steeply compared to last year. “The ‘digital dakshina’ trend reached a new peak this year,” Lamichhane told the Post.
Amit Agrawal, founder of Khalti, said that more people took to digital payments during this festive season due to cash back offers and schemes. "People are shifting from cash on delivery to digital payments not only due to offers, but also because it is a safe mode of payment during this pandemic," he said.
An increase in e-commerce transactions will establish the habit of making digital payments, he said. “We observed a growth of more than 300 percent overall,” he said. The lockdown and safety features pushed up the number of users and transactions during the festival season, he added.