Instant refunds will allow ecommerce platforms to immediately return their customers’ money
The option works with any online mode of payment, whether it is credit or debit card, bank account, online wallet or UPI
Cashfree expect to process up to INR 1 Cr refunds instantly this year
The November 2016 demonetisation announcement brought fintech industry to an edge where mere survival was not an option anymore. With more than 2700 fintech startups present in the ecosystem and the number increasing at a fast rate, the innovation with speed is the only mantra that works in the fintech ecosystem. Bengaluru-based payment gateway platform Cashfree seems to be quicker than others in solving one crucial problem for fintech customers.
After raising $5.5 Mn (INR 38.2 Cr) in its Series A round of funding in April 2019, the company has launched a first-of-its-kind solution ‘instant refunds’ for online payments for ecommerce and other online services such as food delivery etc.
With Cashfree’s instant refunds, ecommerce platforms would be able to immediately return their customers’ money through their original online mode of payment, whether it is credit or debit card, bank account, online wallet or UPI.
The instant refunds solution can be availed without any changes to the existing Cashfree payment gateway integration. It also integrates with other payment gateways, internal product or enterprise resource planning (ERP) process through a simple API.
“Our instant refund solution is already live with our first set of customers and we have seen swift adoption from a growing number of businesses. We expect to process up to 1 Cr refunds instantly this year,” said Akash Sinha, CEO and cofounder of Cashfree.
Indian Ecommerce: Instant Refunds Make A Difference
Google’s Digital Payment 2020 report stated that India currently has the third-largest base of internet users in the world with 300 Mn users. And this number is expected to reach 650 Mn by 2020. According to reports, online retail in India will touch $170 Bn or 8% of the total retail market of the country by 2030, growing at a CAGR of 21%. Further, a July 2019 report by IBEF suggests that online shoppers in India are expected to reach 220 Mn in number by 2025.
While India’s appetite for digital payments is gradually growing, the long refund process acts as a hurdle for ecommerce companies in giving a truly digital experience to their consumers. As Cashfree cofounder Reeju Datta explained to Inc42 recently, what happens right now in the industry is when a customer asks for refunds from Amazon, Flipkart and others, even after the company processes the returns on an immediate basis, it takes 4-5 working days to credit that amount into the customer account. Payment modes such as netbanking, UPI, and others may even take longer.
“Refunds being slow is one of the major causes of bad customer experience for an online business. Around 50% of the support time is spent in resolving complaints regarding refund delays for a merchant and for us as a payment gateway,” Datta said.
With instant refund, once the request is generated from the ecommerce company’s end, Cashfree can instantly refund the amount to the original source without any delay.
“We have built a direct integration with the card network, so we already have the details such as the date on which online payment was made, amount and more. Thus, we can push the refund back to that source immediately. Also, as we are already associated with ecommerce companies as their payment gateway, whatever money a company is processing is anyways with us. So there’s no risk involved a such,” he added.
Launching Instant Refund: Why This Is The Right Time For Cashfree
With such a large growth opportunity, the demand for payment gateway players is rising in India significantly. Atom Technologies, CCAvenue, BillDesk, OBOPay, Ingenico, RazorPay are a few of the rising names in this segment among several others.
However, with Cashfree being the first mover with the instant refund feature for ecommerce companies, it can certainly create a competitive edge for itself in the near future. “We got the idea around 2 years back. This is kind of a payout solution and to build those kinds of banking integrations only, it took us around 18 months. So, we believe this has given us a good head start,” he added.
Further, Cashfree’s latest launch is a timely move towards enhancing consumer trust in the digital payments space in India. As part of the government’s proposed guidelines for ecommerce under the new Consumer Protection Act, firms would be granted a maximum of 14 days to effect any refund requests from customers.
At the moment, there will be no additional charges on instant refunds for Cashfree payment gateway users till December 31, 2019. In the coming weeks, Cashfree also plans on adding cash-on-delivery (COD) orders into its instant refund solution to allow integrated refund management for businesses.