Explained to kids!
Cash on delivery means you order something from far away, but you pay only when it arrives at your door. You can look at it first. Then you pay the person who brings it.
Let’s see it in real life…
Jonas and his two dads are going camping by the lake next month.
They need a bigger tent, and they find one in a shop in another city.
Papa Leo chooses “pay when it arrives” on the order form.
On Saturday morning, the doorbell rings. It’s the delivery woman with a huge box.
Jonas opens the box on the doorstep and unrolls a corner of the tent.
It’s green, it’s big, it’s the right one!
Dad Sami pays the delivery woman with the money he had ready.
She gives him a receipt and takes the money back to the shop.
That night, Jonas builds a test camp in the living room.
That is cash on delivery.
Tiny recap
- It means… paying for a parcel when it arrives, not when you order it.
- It helps when… you want to see the thing before you pay.
- Watch out for… someone has to be home, with the money ready, or the parcel goes back.
…detailed for specialists
Cash on delivery (COD) is a payment method where the shopper orders online but pays only when the parcel arrives, in cash or, more and more, by card, QR code or mobile payment at the door. The courier collects the money and transfers it to the merchant, minus a collection fee.
COD is losing share almost everywhere, yet in 2026 it still decides whether e-commerce works in large parts of Asia, the Middle East, Africa and Eastern Europe. For PSPs and platforms, the challenge is no longer to accept or refuse it, but to make it cheaper, safer and as digital as possible.
What is cash on delivery?
COD separates the order from the payment. The shopper commits to buy online, but no money moves until the goods are physically delivered. That gives the shopper three things that prepaid methods do not:
- Trust: no risk of paying for a parcel that never comes.
- Access: people without a card or bank account can shop online.
- Control: the shopper can often check the item and refuse it on the doorstep.
For the merchant, COD is a way to win shoppers who would not pay upfront. It is also one of the most expensive ways to get paid.
How cash on delivery works, step by step
- The shopper selects COD at checkout. Some merchants confirm the order by phone or message first.
- The merchant ships the parcel with a COD amount attached to the delivery.
- The courier delivers and collects cash, a card payment on a mobile terminal, or a QR code payment.
- The courier remits the money to the merchant, after deducting its fees, usually in batches.
- If the shopper refuses or is absent, the parcel returns to the merchant, which pays the shipping both ways.
Remittance takes time. Couriers usually pay collected cash back in batches, on their own schedule, so the merchant often waits days or weeks after delivery to see the money.
Who handles the money in a COD flow?
Unlike a card payment, COD runs mostly outside the payment system. Several parties touch the money:
- The courier or logistics provider collects the cash, holds it for a few days and remits it. It acts as a de facto collection agent.
- The marketplace or platform receives the remittance, keeps its commission and pays the seller.
- The payment provider comes in when the shopper pays digitally at the door, or when the platform converts COD orders to prepaid ones.
Each handoff adds delay, fees and room for error. This is why COD is as much a logistics and finance topic as a payment one.
Cash on delivery in numbers (2026)
- India: COD still accounts for about 60 to 65% of e-commerce orders (ET Prime Research, 2024, cited by Razorpay), while UPI-based digital wallets carried 68% of e-commerce value in 2025, according to Worldpay. COD is used for many small orders, while larger baskets go through UPI and cards.
- Southeast Asia: COD still represents 23% of e-commerce value in the Philippines and 16% of e-commerce spending in Vietnam, according to Worldpay data reported by Fintech News Singapore in 2026.
- Middle East and North Africa: the preference for COD halved from 41% to 20% in four years, and fell as low as 10% in Saudi Arabia, the UAE and Kuwait, according to Checkout.com’s 2024 MENA study.
- Europe: in Romania, 60 to 65% of online orders are still paid on delivery, according to the Romanian Association of Online Stores (ARMO).
Why COD remains popular, and why merchants want to move away from it
The shopper’s side
COD protects first-time buyers, works without a card and fits cash-based economies. On marketplaces and social commerce, where shoppers do not know the seller, it is often the only way to build trust quickly.
The merchant’s side
- Returns to origin: refused or undeliverable orders cost two shipments and tie up stock. Because a COD order costs the shopper nothing upfront, it is refused far more often than a prepaid one.
- Collection costs: couriers charge for collecting and handling cash.
- Delayed cash flow: the money arrives days or weeks after delivery.
- Fake orders: COD is an easy target for prank orders and competitors’ sabotage, because the order costs nothing.
- Cash risk: theft, counterfeit notes and remittance errors.
Some platforms pass these costs to shoppers through COD fees, which regulators watch closely. In October 2025, India’s consumer affairs ministry opened an investigation into extra charges on COD orders, calling them a dark pattern.
From cash to digital COD
COD is turning into “pay on delivery” with digital methods. Couriers carry card terminals or show a QR code, and shoppers pay with a wallet or an instant payment such as UPI in India. Merchants also send a payment link or a request to pay before dispatch, with a discount for prepaying. Others ask for a small upfront deposit on COD orders. For high-ticket items, buy now, pay later can replace COD as the “pay later” option, with the credit risk moved to a provider.
Cash on delivery: what changes for PSPs, PayFacs and platforms
- Orders without authorization: a COD order has no payment authorization. Order management, risk and analytics tools must treat it as a pending payment, not a paid order.
- COD eligibility and risk scoring: showing COD only to trusted shoppers, addresses and basket sizes cuts returns. Velocity limits on new accounts and phone numbers help block fake orders.
- Conversion to prepaid: payment links, QR codes and instant payments let platforms switch a COD order to a digital payment at any time before or at delivery.
- Reconciliation: courier remittances arrive in batches, net of fees, sometimes with missing orders. Matching them to orders and to digital payments taken at the door is a core finance task.
- Marketplace payouts: sellers should be paid only once the cash is collected and remitted, with split payments for the platform’s commission.
- Refunds: a cash payment cannot be refunded to a card. Platforms need bank details, wallet credit or payouts to refund COD shoppers.
Running COD next to cards, wallets, instant payments and BNPL, with one view of every order, is a payment orchestration job. NORBr provides the white-label payment infrastructure to route, onboard, pay out and analyze, under your own brand.
Is cash on delivery worth it in 2026?
In markets where COD still carries a large share of orders, removing it costs sales. The goal is to offer it selectively, price it fairly and convert as many COD orders as possible to digital payments. In card- and wallet-dominated markets, COD is a niche for specific segments. Either way, the long-term trend is clear: cash at the door keeps shrinking, while “pay on delivery” with digital methods keeps the trust that made COD successful.
Frequently Asked Questions
What is cash on delivery?
Cash on delivery (COD) is a payment method where the shopper orders online and pays only when the parcel arrives, in cash or by card, QR code or mobile payment at the door. The courier collects the money and transfers it to the merchant, minus a fee.
Where is cash on delivery still popular?
COD remains common in India, Southeast Asia (notably the Philippines and Vietnam), parts of the Middle East and North Africa, and Eastern Europe, such as Romania. It is declining fast in Gulf countries, where cards and wallets have taken over.
What are the disadvantages of cash on delivery for merchants?
High return-to-origin rates, courier collection fees, delayed cash flow, fake orders and the risks of handling cash. Because a COD order costs the shopper nothing upfront, it is refused or returned far more often than a prepaid order.
Can you pay by card with cash on delivery?
Yes, in many markets. Couriers increasingly carry mobile card terminals or display QR codes, so shoppers can pay at the door by card, mobile wallet or instant payment such as UPI. This is often called pay on delivery.
How can merchants reduce COD returns?
By confirming orders before shipping, offering COD only to trusted shoppers and baskets, giving discounts for prepayment, sending payment links before dispatch, and asking for a small deposit on risky orders.
