Cash on Delivery (COD): Definition, Meaning & Guide for Indian Businesses

COD is the e-commerce payment model where the customer pays the courier in cash on receiving the package. Common for first-time buyers in tier-2/3 India.

What is Cash on Delivery (COD)?

Cash on Delivery is the dominant payment method for Indian e-commerce outside metros — 60-70% of orders in tier-2/3, dropping to 20-30% in metros. Customers prefer COD because: card penetration is low, online fraud worries, want to inspect goods first. Sellers hate COD because: 20-30% return-to-origin rate, ₹50-100 per-shipment COD handling fee, cash blocked for 7-15 days. Strategies to reduce COD share: instant ₹10-50 discount on prepaid, COD fee on customer, partial prepayment via UPI.