Categories such as footwear and fashion have seen the highest preference for credit-based prepaid payments
Indicating healthy economic performance and increased consumer sentiment, the preference for credit surged from 3.49 per cent to 6.9 per cent this year, according to a report by GoKwik, an ecommerce enabler. The report highlighted that credit has almost doubled this festive season largely led by credit cards and buy now, pay later (BNPL) options for direct-to-consumer (D2C) brands on GoKwik’s network.
This Diwali sale period shoppers showcased a higher preference for prepaid payment modes with a 13 per cent surge in prepaid orders compared to last year. On the contrary, cash on delivery (COD) orders saw an 8 per cent dip in the same period.
Categories such as footwear and fashion have seen the highest preference for credit-based prepaid payments while certain other categories like beauty and personal care continued to show high preference for COD.
While COD enables businesses to access a wider customer base in Tier 2 and Tier 3 regions, it can also cause cash flow delays, higher return rates, and increased logistical costs, potentially impacting profitability. However, COD in India still continues to be dominant at 46 per cent followed by UPI at 44 per cent.
“Affordability has always been a key driver for ecommerce growth in India, with shoppers opting for more flexible payment choices. We’ve been focused on building an ecosystem that supports this innate need among Indian shoppers. Having a higher prepaid share of orders helps brands mitigate the impact of return to origin (RTO) and enables profitable growth for them. Our efforts in this direction have started to show the much-needed shift in consumer preference,” said Chirag Taneja, Co-founder and Chief Executive Officer (CEO), GoKwik.
Another interesting trend during this festive period is the shift in consumer preference from COD to credit payment options such as credit cards and BNPL in tier 3 cities.
Rohit Prasad, Managing Director (MD) and CEO, Easebuzz, added, “We are happy to support GoKwik during this festive sale period. With an exceptional 99.9 per cent uptime, Easebuzz platform empowered D2C brands manage millions of transactions without any downtimes, a crucial advantage during peak shopping periods. Our extensive payment acceptance methods, affordability suite with BNPL and EMI options, coupons and rewards during checkout helped these brands deliver a superior shopping experience for their customers.”
While overall Average Order Value (AOV) rose by a nominal 3 per cent during this period, categories like fashion and jewellery saw particularly strong growth at 15 per cent and 13 per cent respectively. Categories with high AOV products like electronics saw a 36 per cent increase in credit card payments and a 27 per cent increase in BNPL, showing that shoppers prefer these payment methods for high-value purchases.
