If you’re planning to sell online or already running an eCommerce website, you’ve probably asked yourself this question:
“Should I offer Cash on Delivery (COD) or push for Online Payments?”
The short answer? Both have pros and cons.
And the best option often depends on your product, audience, and business goals.
Let’s break it down in plain English so you can make the right decision for your store.
First, What Do These Terms Mean?
- COD (Cash on Delivery):
The customer pays in cash (or UPI) when the product is delivered. - Online Payment:
The customer pays in advance using UPI, debit/credit card, net banking, or wallet while placing the order on your website.
Benefits of COD (Cash on Delivery)
COD is still a popular payment method in India, especially in Tier 2 and Tier 3 cities.
Here’s why:
1. Builds Customer Trust
People are more willing to try your brand when they don’t have to pay upfront.
“What if the product doesn’t arrive?” is still a real concern for many buyers.
2. Useful for First-Time Buyers
If someone is buying from your website for the first time, COD gives them a sense of control and safety.
3. Works Well in Cash-Preferred Areas
In many semi-urban and rural areas, cash is still king. COD lets you reach those audiences.
Downsides of COD
It’s not all good though — here’s what you should watch out for:
1. Higher Return & RTO Rates (Return to Origin)
Many COD orders are rejected at the door. This leads to:
- Lost shipping costs
- Damaged goods in return
- Lower profit margins
2. Slower Cash Flow
You only get paid after the delivery is completed — which delays your cash cycle.
3. Extra COD Charges from Couriers
Logistics companies often charge ₹20–₹50 extra per COD order.
Benefits of Online Payments
Now let’s talk about why online payments are a better option for many brands today.
1. Instant Payment = Better Cash Flow
You get the money immediately or within 24–48 hours.
This helps with inventory, marketing, and scaling faster.
2. Lower Returns & Fake Orders
When people pay upfront, they’re less likely to cancel or reject delivery.
This reduces your return-to-origin (RTO) losses.
3. Automated Order Management
Online payments work well with:
- Automated order confirmation
- WhatsApp updates
- Invoice generation
- Inventory syncing
4. Better for Digital Products & Services
If you sell downloads, memberships, or bookings — online payment is the only option.
Downsides of Online Payments
Let’s be fair — online payments have a few challenges too:
1. Some Users Still Don’t Trust Online Checkout
Especially in the age group 45+ or in remote areas.
2. Technical Glitches Happen
Sometimes payments fail, or customers abandon the cart due to slow checkout.
3. Need a Payment Gateway
You’ll need to integrate tools like Razorpay, PayU, Instamojo, etc. (though this is quite easy now).
So, Which One Should You Choose?
Honestly? Offer both.
But nudge people toward online payments using smart strategies.
Here’s a simple way to do it:
Smart Strategy: COD + Online Payment Combo
| Tip | Why It Works |
|---|---|
| ✅ Offer COD, but add a ₹30 COD fee | This makes online payment more attractive |
| ✅ Add prepaid discounts (e.g., ₹50 off) | Encourages digital payment adoption |
| ✅ Highlight “100% secure payment” badges | Builds trust |
| ✅ Use WhatsApp or SMS confirmation after order | Reduces COD rejection |
| ✅ Add UPI as the first payment option | It’s fast, free, and popular |
Real-World Example
Let’s say you run a D2C store selling copper bottles.
- First-time buyers choose COD for safety
- You charge ₹30 extra for COD
- Repeat buyers get 5% off on prepaid orders
- Over time, 70% of your orders shift to online payment
This strategy:
- Reduces RTO
- Improves profit margin
- Builds trust without losing customers
Final Thoughts
In 2025, digital payments are growing fast — but COD still plays a role in India.
The goal is not to choose one over the other — but to offer both, and gradually move customers toward online payments.
“Let customers feel safe. But guide them to what’s better — for them and for you.”
Need Help Setting Up COD and Online Payment?
At Eco Web Craft, we build custom eCommerce websites for Indian businesses — with full payment gateway setup, COD options, WhatsApp integration, and more.
Whether you want Razorpay, PayU, or custom logic for COD charges — we’ve got your back.
