Up until very recently, cash on delivery was considered the only feasible and viable payment option for eCommerce companies in the country. So much so that 72% of Indians preferred COD to be a viable payment option for their online purchases. While the payment mode has spearheaded an unprecedented growth for eCommerce in the country, over-reliance on the mode has also hindered the sector in equal bounds. Owing to different complications rendered by COD, the sector has seen numerous hurdles to its growth and profitability. But, the most pertinent question in everyone’s minds is what exactly is the problem with cash on delivery?

Let us first look at the difference.

Cash on Delivery vs Advance Online Payment Collection

  Cash on Delivery Advance Online Payment Collection
Definition of the terms A transaction in which the payment of the goods/services are made when the goods/services are delivered. Advance payments are amounts paid before a good or service is actually received.
Advantages Restores Clients trust in your brand Faster Access To Capital
Eliminates credit risk 
Eliminates the risk of non-payment
No late payments
Disadvantages Customer may backout and refuse to pay Customers worry that goods may not be sent if payment is made in advance
Most commonly used payment options Cash and Debit card Wire transfers and credit cards

Let us look at all the reasons why Automated Advance Online Payment Collection is the most secure and least risky method for an e-commerce transaction.  

COD (Cash on Delivery) is More expensive

One of the biggest problems that eCommerce businesses have is the costs that are incurred on cash on delivery orders. This stems from having limited, trustworthy courier and logistic partners who can process the order. Thanks to the limited number of options, the costs of these courier services are often high. Secondly, when a company sells a product, they have to account for two different types of costs – fixed and variable and depending on the item, the profit on these costs is reduced in the case of COD orders.

Along with these hindrances, COD orders also invite with it the option for the customer to refuse the delivery. In such cases, the company must bear the return costs as well. From not needing the product to not being satisfied, the returns on COD orders are generally higher, meaning more costs incurred on the business.

COD (Cash on Delivery) is Slower in comparison

For COD orders to be processed, companies have to wait for a considerable amount of time before the amount reflects in their account. From multiple delivery attempts to some hiccups on the customer end, COD orders usually have numerous reasons that could lead to a delay for the payment to be processed. All this time, companies that are in a capital-intensive business have their capital tied up in the process, making it extremely inconvenient for customers. Moreover, managing physical cash is a cumbersome process that needs receipts, invoices, and records to be maintained manually, leading to inefficiency and delays.

Advance Online Payment Collection reduces the risk

Carrying cash and expensive merchandise is not the safest of options. The risk of theft is high and can lead to heavy losses, for the merchant and the courier services. For this very reason, numerous courier services limit the order amount for COD deliveries to reduce the risk. Not having the right denominations to not having the requisite funds, COD deliveries can bring with it numerous risky propositions that different companies want to mitigate at any cost.

Owing to the above reasons, eCommerce companies across the world are opting for online payment modes to process different orders. 

Along with overcoming the aforementioned shortcomings, automated advanced online payment collection also brings myriad advantages like:

  1. Reduced costs

When customers already pay for the product, they are less likely to opt for a return. This significantly reduces the courier costs that are incurred on the product. Moreover, with the customer already having paid, the merchant just has to manage the delivery of the product, which can be taken care of by any courier service.

  1. Convenient payment process

Advance Online payment collection or Cash in Advance is easy and quick. eCommerce companies today accept different payment options from credit cards to mobile wallets to online bank transfers. This process ensures there’s no waiting period for the company ensuring that the working capital and records are constantly updated in real-time.

  1. Secure payments

Advance Online payment collection immediately reduces all the risks that are pertinent with cash on delivery orders. With online payment collections using PCI DSS level 1 certification, companies can be certain of the security that these modes offer. Moreover, the PSP will put its risk management technology and fraud detection algorithms to use to avoid chargebacks and reduce fraud. This has a ripple effect on customers trusting the service too.


The Indian customer has been accustomed to the convenience and familiarity of COD. But the time is right for eCommerce companies to educate and guide their customers about the advantages of online payment collections and processes. With different eCommerce giants already providing exclusive discounts and offers to push for online payment collection, the time is now for companies to adopt similar strategies across the Indian landscape. Automated Advance Online Payment Collection is one of the many features available with the Easebuzz Payment Suite. To learn more write to us at sales@easebuzz.in or support@easebuzz.in


The author writes about fintech, banking, and future of SAAS services. He works as an SEO analyst at Easebuzz, so if you're looking for an account that tracks India's fintech scene, you should check out his Easebuzz blog.