Could Purse Solve India’s COD Problem? Author: Ian DeMartino Last Updated: 21 September 2016 Purse.io, the Amazon discount site is opening to India’s markets. Could it help solve the issues the e commerce industry has faced in the emerging economic behemoth? India is one of the three premier emerging economies along with China and Russia. A robust and growing technology sector along with a high birthrate has made the country appealing to investors of all types. There is a major issue for companies trying to break into the Indian economy: it lacks infrastructure. While India’s unbanked numbers fell in 2014, those efforts have since stalled. A mind boggling 21% of the world’s 2 billion unbanked population live in India, according to the Worldbank. As a result, Cash on Delivery is the most popular way to purchase items online. While difficult to pinpoint when, Cash on Delivery fell out of favor in the United States sometime after the rise of Credit Cards. In India however, it has remains extremely popular. Without bank accounts, the Indian population were unable to purchase goods online, until popular retailer Flipkart burst onto the scene. In the early 2000s, India Plaza was the largest Indian online retailer. It stopped offering CODs in 2004 because of the problems and costs that it incurred. When Flipkart launched in 2008 it touted CODs as a major selling point. Flipkart quickly became the most popular online shopping destination in India. India Plaza was never able to recover and shut down in 2014. Today, every popular e-commerce site in India, including Amazon.in, offers COD. CODs make up over 60% of India’s online purchases, according to Indianonlineseller.com. The problem is that retailers hate it. Couriers that offer COD support charge for the convenience. Depending on the cost of the item, it could run the retailer 5,000 INR or up to 3% of the item’s cost. Worse, returns are significantly higher when the customer has not already paid for the item. Scammers sometimes beat up and rob deliverymen for items. All of this means more cost for the retailer and ultimately, customers. How Purse.io and Bitcoin Can Help The number of customers who prefer or can only pay with COD offset those disadvantages. It is difficult to prepay fore something online if you don’t have a credit card. Potential customers’ issues are increased with spotty internet coverage. Obviously, entering credit card information to a public computer is a bad idea. But, using a cell phone to scan a QR code on Purse.io is perfectly secure. But an increasing number of Indians have cell phones. And while their mobile connection is spotty at best, you don’t need a consistent connection to use a mobile banking solution, including bitcoin. By opening up to India, Purse is giving Indians a new option, and are able to offer significant discounts for doing so. Indian’s economy is growing but it still has a large number of poor who would benefit significantly from anything that helps them stretch their Rupees as far as they will go. Still Not a Perfect Solution There will be challenges however. Chief among them: getting bitcoin into the hands of Indians. Purse is partnering with Unocoin. Often called the Coinbase of India, Unocoin has to be connected to a bank account. While there are a number of LocalBitcoin offers in India, only ten of them are cash deposit or local cash trades. The best current LocalBitcoins cash or cash deposit offer includes a 4.85% markup on the current cost of bitcoin. Other offers only go up from there. India’s unbanked population is very large but its banked population is still significant. They will be able to easily take advantage of Purse’s discounts. Purse could potentially save Indians a lot of Rupees between its top end 15% – 22% discount and the 3% COD fee. Purse will need to find a way to get bitcoin into the hands of the unbanked in an inexpensive manner, if they want to truly disrupt the e commerce economy in India. One method Purse is already pursuing is by appealing to Indians who work for Amazon’s Mechanical Turk program. “Amazon Turk workers have a limited choice of payment options: a USD check in the mail, or an instant Amazon gift card balance. Purse helps individuals like these by providing them a secure method to convert that balance to a more spendable form [bitcoin] and introduce more people to the power of borderless payments thanks to bitcoin.” For the millions of Indians who are paid with traditional means, that won’t be an ideal solution. Thanks to Purse, Indians have a real reason to use bitcoin. Now we just have to figure out how to get it to them.