What Is Cash On Delivery
Cash on delivery is a payment method that allows customers to pay for a product once it is delivered. Cash-on-delivery (COD) is the only widely accepted post-payment method in the e-commerce industry, against all the pre-paid payment methods fueled by online transactions. Merchants also refer to it as cash-on-demand and collect-on-delivery.
Significance of Cash-on-Delivery in an E-commerce Shipping and Delivery
Cash-on-delivery benefits both e-commerce brands and customers simultaneously. COD helps e-commerce brands reach more customers and reassures customers that their money is not at risk if the order is not delivered or delayed. Some significant benefits of COD are
- Flexibility of payment
As the name suggests, a customer is required to pay once the product reaches their doorstep. In other words, anyone unable to move forward with a digital transaction can leverage this method to order products online.
- Better Coverage
Online payments are yet to be available to everyone, unlike the internet. Cash-on-delivery allows customers to buy without the need to have an online payment method.COD itself unlocks a new demographic of such individuals to a brand.
How COD Works and Prerequisites for COD
Customers can select COD as their preferred payment mode while confirming their order. Depending on the brand, customers may pay by cash, debit or credit card at the time of delivery. Usually, a buyer can use this method if they meet specific prerequisites. These requirements may vary, but the common ones are:
- Minimum order value: The cart value must surpass a particular COD order value.
- Destination: Brands may not cater to certain regions if shipping companies do not support the COD option in that area. Such decisions are based on the buyer’s destination.
Use Case With COD
Cash-on-delivery is the most prevalent payment force in the e-commerce industry. For example, a customer orders a cosmetic product and pays after they receive it. Any transaction between a brand and a customer like this can be considered a COD use case. To avoid any e-commerce scam, online brands impose a minimum order value limit.