CASH-ON-DELIVERY VS DIGITAL PAYMENTS: CONSUMER AND ENTERPRISE PREFERENCES IN BIHAR

Abstract

This study analyses consumer and enterprise preferences between Cash-on-Delivery (COD) and digital payments in Bihar, a predominantly rural, lower-income state that has nonetheless witnessed rapid digital infrastructure growth. Using primary data from 850 consumers and 200 enterprises across 15 districts, combined with secondary information from financial institutions, e-commerce platforms and official sources, the research employs descriptive statistics, regression analysis, logistic modelling and qualitative insights. Despite large investments in digital systems, COD still accounts for about 68 percent of e-commerce transactions in Bihar, compared with a national average near 35 percent. Trust, perceived security, digital literacy and access constraints strongly shape payment choices: trust factors alone explain around 74 percent of variance in payment preference, while digital literacy has an odds ratio above 2 for digital adoption. Demographic patterns are stark, with 58 percent of urban consumers preferring digital payments versus only 23 percent in rural areas, and 72 percent adoption among 18–30 year-olds compared with 18 percent among those aged 50 and above. Enterprises, though operationally inclined towards digital receipts, continue to support COD to align with customer preferences, especially in rural markets. The paper concludes that payment behaviour in Bihar reflects a complex interaction of trust, literacy, infrastructure and demographic factors; policy and business strategies must therefore go beyond infrastructure provision to address behavioural and capability gaps.