Cash on Delivery or CoD remains the major mode of payment for 80% of online shoppers in Indian tier-2 and tier-3 cities. The growth witnessed in the e-commerce industry over the past decade has revolutionized the way business is conducted in the country. The volume of online shoppers in the country grew from 110 million people in 2018 to 150 million in 2020. And, this volume is expected to grow to 190 million people in 2021.

Even with such an exponential increase in online shopping, it’s witnessed that customers need time to trust a particular brand and shy away from making full payment before receiving their product or service. This leads to an inclination towards choosing cash on delivery as opposed to paying digitally.

In this blog, we list down the reasons why cash on delivery continues to be relevant for your online business even in the era of digital payments. Read on. 

What is Cash on Delivery (CoD)?

Cash on Delivery or CoD is a payment method where the buyer of a good or service chooses to pay in cash at the time of order fulfilment rather than paying for it in advance. 

With online shopping becoming a rage with consumers over the past few years, cash on delivery has remained one of the most preferred forms of transactions between businesses and consumers.

Why do customers prefer Cash on Delivery?

The digital payments revolution over the past decade has gripped the country with countless shoppers making cashless transactions. However, there is still a sizable chunk of the Indian population that is sceptical about shopping and paying online. 

Here’s why CoD is here to stay as a popular mode of payment for customers –

  • Limited access to the internet

Let’s face it – internet penetration is still low in our country and connectivity remains a major concern for residents in tier-2 and tier-3 cities. Increased cases of failed payments due to limited access to the internet push customers for CoD payments.

  • Relieves stress 

CoD gives a chance to customers to physically check the product out before deciding whether to pay for it or not. Therefore, the cost and quality conscious customers continue to remain keen on physical transactions through Cash on Delivery. 

  • Familiarity with cash payments

Cash on delivery remains a popular payment option, especially among the not so tech-savvy customers. Customers who are comfortable paying in cash prefer to stay in their comfort zone. 

  • Increased cases of fraud 

The online payment scams have created a slight trust deficit amongst many customers. While people trust certain payment gateways and websites, they are wary of sharing their account details or transaction details on the internet fearing no guarantee of sale and cyber theft. 

What is Cash on Delivery (CoD)?

Cash on Delivery or CoD is a payment method where the buyer of a good or service chooses to pay in cash at the time of order fulfilment rather than paying for it in advance.  With online shopping becoming a rage with consumers over the past few years, cash on delivery has remained one of the most preferred forms of transactions between businesses and consumers.

How Does Cash on Delivery Work?

Let’s understand the process of a cash on delivery order.

The customer places an order for a product or service on the app or the website of the company by submitting the details about the place of delivery. Here, the customer opts for cash on delivery as the mode of payment and the order is placed.

Now, the company either has its own delivery agents or has a delivery partner they use to deliver their products or services to the customer.

Once the product is ready to be shipped, the delivery agent collects it and delivers it to the customer and collects payment in cash. This amount is then deposited by the delivery partner into the company’s account after deducting the delivery and shipping charges.

Pros of Cash on Delivery

In addition to having a range of digital payment options, it’s crucial for businesses to have CoD as a payment option in operating a successful online business.

  • Wider outreach

CoD helps businesses reach out to a wider market that may be apprehensive towards online payment options. Paying cash on delivery settles the anxiety for several customers and helps businesses in converting potential tier-2 and tier-3 customers to loyal returning customers.

  • Multiple payment options for customers

While it helps businesses reach a wider audience for the goods and services of the company, CoD also displays the flexibility of the business to accept an array of payment options.

  • Bridges the technological gap 

Despite digitisation and the smartphone revolution, millions of people in India still do not have access to a smartphone or internet services to enable online payments. This makes CoD the only payment option for many people in the country. Therefore, CoD helps brands enter remote demographics where internet connections and smartphones are not avidly available or used.

  • Builds customers’ trust

With cyber frauds and scams on the rise, many customers voluntarily choose CoD and refrain from online financial transactions. CoD remains the only mode of payment for such customers. And letting go of such a big market segment can largely impact a business’s revenue.

Cons of Cash on Delivery

Granted that most Indian consumers prefer CoD over an online transaction and it’s a must-have for e-commerce and online businesses, handling CoD refunds can be costly and cumbersome for sellers who lack a proper refund process.

Here’s what happens when a customer returns their order and opts for a refund.

The business sends out a form or an email which the customer needs to fill out with their bank account details.

Next, these details are passed onto the team responsible for making payouts for the refunds – the team manually makes a one-off payout by uploading the account information on the bank’s portal, or making a bulk payout if there is more than one refund.

This manual, time-intensive and error-prone process of cash on delivery refunds takes 5 to 7 business days, making it difficult for both the business and their customer. 

Streamlining CoD refund with RazorpayX Payout Links 


With about 30% of online businesses experiencing returns and CoD facilitating a big chunk of online purchases, cash on delivery refunds is not a problem that can be overlooked. RazorpayX Payout Links streamlines and fastens the process of CoD refunds in minutes. 

With Razorpay X Payout Links, businesses can automate the entire process of crediting the refund amount to the customer’s bank account, instead of manually crediting the payment.

All you have to do is create a Payout Link along with basic customer details like name, contact, email and the amount to be refunded.

Next, this payout link is sent to your customer where they can verify their details using an OTP, enter their bank account details and receive the refund instantly.

Over to you

Let’s agree that cash on delivery is here to stay and is largely popular with different demographics. So, rather than struggling and losing money on manual CoD refunds, start processing 24*7 instant, secure CoD refunds without collecting your customer’s bank account details, today!

Automate CoD Refunds for your Business

Author

A potterhead finding magic in words | Content Marketer @ RazorpayX

Write A Comment