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How Cash on Delivery Works

With the rapid growth in E-commerce and globalized connections, Cash on Delivery (COD) has become a popular payment option. Basically when a customer places an order online, he/she has to make the payment in cash at the time of product delivery. If the customer is reluctant to pay online but willing to purchase the product, COD is an ideal solution. Unlike online transactions, you do not have to have a PayPal account or online fund transfer accounts to buy goods and services online when this option is available. The killer feature of COD is until you physically see the product you ordered, you do not have to make the payment. In most of the Asian markets, customers prefer this “physical factor” and thus opt for COD as a payment method for online purchases.

As a payment method, COD offers a magnitude of advantages to both customers and retailers in terms of convenience and security of payments. The model was initially developed as a result of growth of online stores and hesitance of buyers to make the payment via an online payment gateway. Orders using COD are set to processing unit till the payment is settled upon delivery of the order by the customer or customer’s shipping method. This service gives retailers that payment for the products will always be made.  

The Process

When you select a particular product from an online store, you have to select a payment option. You can choose “COD” and finalize your purchase decision. Once you confirm the delivery method, you will be notified about the delivery date and time.  Upon the delivery of goods, you have to make the payment and accept the package.        

 COD process is easy and all what the buyer is supposed to do is, confirming the order online and making the payment once the goods are delivered to their doorsteps or any other preferred pick-up point.  Some sellers accept the payment in cheques as well which is not a widely adapted practice. In some cases where the invoiced amount is greater, buyers may not entitled for COD option but it depends on the policies of the supplier. COD is not only applicable for local orders but also for international orders too.

How COD Evolved?

There are significant factors that influenced the development of COD model as a substitute to online payments. They are,

·         Convenience

Unlike the typical online payment methods, COD is quite an easy solution. The other online payment methods requires a lengthy procedure which some buyers find time consuming. With COD the hassle of online payment procedure is no more. For a buyer who is new to online transactions, there is no other better solution than COD.

·         Lack of secure online payment gateways

Though there are some well-recognized and authorized online payment gateways, not all the e-commerce sites are using them. Most of the times, small scale online stores do not use such payment techniques. In such cases, buyers often refuse to make the payment online though they badly want to buy a particular product because of this security issue. COD comes to play now and helps both buyers and sellers.

·         Fear of online scam

Due to the hike in online scams and malpractices, buyers are very concerned about making payments online as it requires sharing their credit/debit card information at the point of proceeding the payment. Thus online buyers opt for COD as a way to get rid of such online scams.

·         Buyers’ familiarity with cash transactions

Not all the consumer markets are fully digitalized and practicing sophisticated payment methods. In some markets conventional cash payments are preferred over online payment methods. When reaching such markets, virtual stores offer COD for the convenience of buyers and to gain the trout of customers.

·         Less debit/credit card users

In some demographics markets, buyers do not uses credit and debit card often. When such buyers want to purchase online, they find it hard to make the payment. COD has become the perfect payment solution in such markets enabling to buy goods online with no electronic cards.

·         Consumers’ resistance to pay online   

Buyers who are not familiarized with online market and payment systems, do not want to pay before they actually receive the goods. The category of buyers who fall into the lower layers of the aging pyramid a.k.a senior citizens and baby boomers are usually reluctant to make payment online according to researches. In contrast millennials always look for online transactions. COD is the solution available for the said category of buyers when they want to purchase products online.

Benefits of COD to Buyers

·         No need to have a credit/debit card to make an online payment

·         No need to have a PayPal account or any such online payment account to order products online

·         Can easily place an online order without any hassle of making a payment

·         Goods will be delivered to a location you prefer  and convenient for you

·         Can inspect the product physically before you actually pay for the product

·          Trust on the seller is enhanced as you pay after you receive the goods

·         Allows to order goods without the immediate need of cash in hand

Benefits of COD to sellers

·         Increase of impulse purchases online

·         Assurance of receiving  of cash

·         Can reach a wide target audience not only the buyers with online payment abilities

·         Ability to develop customers’ trust

·         Products can be sold online even in markets, where buyers refuses paying money before they receive the product to their hands

COD and Parcel.lk

Parcel.lk is the one and only customer-centric curious service in Sri Lanka, dedicated to deliver your “Package of Happiness” on time and at reasonable charges.