Why and How to Reduce Cash on Delivery Payments for Your Online Store

cash on delivery

Even as India marches towards a cashless economy, a sizable chunk of the population is fairly new to the digital world and prefers cash transactions. As a result, cash payments are still the preferred option for many shoppers.

Despite a surge in digital transactions in the financial system, cash in circulation is up 9.2% in the economy. As of March 18 2022, it hit an all-time high of Rs 31 lakh crore compared with Rs 28.5 lakh crore in the year-ago period.

For e-commerce businesses that are well equipped to manage online transactions, cash on delivery can be disadvantageous for multiple reasons. So, how can a business ensure that more and more of its customers pay online? 

This article explores the various methods that an online business can adopt to reduce cash on delivery payments and encourage their buyers to pay online.

Why is cash on delivery unfavourable for businesses?

Payments made after a product’s delivery can be detrimental to a business’s growth for a number of reasons, especially because of the following issues.

They impact the cash flow for a business that needs constant capital for their day-to-day operations since the time taken to receive a cash payment is much longer than an online one where settlements can happen even in real-time.

Cash on delivery increases the chances of returns because buyers may decline the delivery or not hold an obligation to accept it considering they haven’t done the payment in advance.

It also increases costs for a business as the logistics partners usually charge handling services on the amount paid by the customers in cash.

How can businesses reduce cash on delivery payments?

While customer awareness plays a huge role here, businesses can motivate most buyers to shift to digital payments with the following initiatives.

  • Incentivise: Offer rewards in the form of cashback/coupons/points to buyers who choose to pay through an online method. A benefit that saves/earns them money can discourage them to pay by cash.
  • Limit COD purchase: Allow cash on delivery option after the cart value has reached a specific amount/items so that most users pay through a digital method.
  • Shipping charges on COD: Introducing additional shipping or handling charges for orders that choose the cash option can encourage customers to pay online.
  • All online payment options: A crucial reason for users not paying online is the absence of their preferred payment method. Ensure that your payment gateway offers maximum options to the buyers.
  • False order: Identify fake or erroneous orders by running sanity checks on the address, email ids and phone numbers of buyers. Incomplete labels and cryptic emails can easily help recognise false or fraudulent orders.
  • Disable COD periodically: Pausing the cash on delivery option during events and festivals when sale volumes are exceptionally high can help businesses ensure hundred percent online transactions. 

However, with the above-mentioned points, there is also a chance of cart abandonment if buyers are firm about cash payments. Nevertheless, businesses must gauge their audience and take decisions that can benefit them as well as the consumers.

How can Paytm Payment Gateway reduce cash on delivery for businesses?

Paytm Payment Gateway is a robust and reliable solution for businesses to ensure easy and seamless online transactions for their customers. Here’s a look at the key features it offers.

Paytm Payment Gateway offers a robust and reliable platform for businesses to conduct seamless transactions. Here’s a look at the key features it offers.

For your customers

  1. Paytm Payment Gateway has more than 100+ payment sources to choose from and is the only payment gateway that offers fixed deposits as a payment source to customers. 
  2. With 250mn+ saved cards, 100mn+ saved bank accounts and 15mn UPI IDs users do not need to repeatedly add payment details thus decreasing transaction time and increasing online payment success rates.
  3. Paytm Payment Gateway uses its in-house banking infrastructure and has direct integration with the top six banks and 15 bank gateways, that ensure successful payments each time.
  4. Paytm Payment Gateway is compliant with an SSL certificate and PCI-DSS Level 1 so that the personal information of consumers is secure from online threats. A dedicated team of 200 cyber security experts ensure that every payment is safely processed.

For your business

  1. The powerful merchant dashboard has multiple insights to track sales, conversions, and success rates along with transaction history, settlement reports, refund details and so on.
  2. With 100% online onboarding, instant activation and minimum documentation you can start accepting payments within 24 hours.
  3. Paytm Payment Gateway has integrations with 30+ e-commerce platforms/plugins including Shopify, Woocommerce and Magento.
  4. There are no setup and maintenance fees and the pricing plan can be customised for enterprises based on their scale.
  5. Paytm Payment Gateway offers T+1 settlements on business working days along with batch and real-time settlements based on the business requirements.


It is a matter of time before cashless transactions become a norm across regions and industries. Till then, every business must make an effort to minimise cash on delivery payments and focus on digitising payments. Online transactions are not only secure but also favourable for quick business growth.

Choosing the right payment solution partner which eases transactions can further encourage buyers to avoid cash on delivery. Paytm Payment Gateway offers all the necessary features that make payments easy, safe and secure on your website. 


Switch To Paytm Payment Gateway

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