With access to smart devices and high-speed Internet, online shopping has become a buzzword. Apart from going digital, another thing that influences shoppers is online payment. But, how beneficial this payment mode is for e-commerce businesses. 

Let’s get into the article to understand how online modes are more convenient and what are the challenges that come with cash on delivery payment options. 

What Are The Challenges That Occur With The Cash On Delivery?

For some shoppers, COD is quite convenient; this mode of payment comes with a lot of challenges for shoppers as well as for businesses. Some of them are:

High Cost:

Cash on delivery cost is often higher than the actual amount. This cost is borne by the sellers and makes economic prices higher than the actual price. Also, there are delivery partners involved in the COD transactions who charge extra fees on COD orders. There are operational costs, cost of return orders and the levy of additional charges on COD orders.  

Restricted Cash Flow:

Unlike online payments, where the payments get instantly transferred to the seller, cash delivery takes time because payments reach the sellers very late. This restricts the cash flow and makes it difficult to maintain the daily operations. For instance delivery apps, the payments are processed after the delivery of the product. This increases the wait time and sometimes if the order is not accepted, the seller ends up spending more than earning. 

Refund Issues:

The refund policy for cash on delivery is different from prepayment, and it calls for many challenges. When the cash on delivery order is accepted and returned, the online store sends the refund from the registered email address to the customer.

The customer fills out that refund form and provides the bank details; if the customer has paid the cash, the refund is sent to the bank account. Once the form is received, the details are shared with the team to process payouts for refund.

COD Limitations:  

Since the COD comes with high costs and risks associated, many businesses have put limits on the order for COD transactions. In such cases, the customers either have to make payments indirectly, either through the cash in the bank or in sub-orders.

Now that you know there are a lot of challenges with cash payments, these challenges can be resolved with the help of technology. Here are a few reasons why people prefer online payments:

7 Reasons Why You Should Prefer Online Payments:

Online Payments Eliminate Geographical Boundaries:

If you travel to another country or continent, the first thing you need to consider is the payments in your wallet. This payment can be in the form of exchanged currency or through a different credit card than they are using. Also, online payments eliminate the obstacles to getting into the global market.

Some payment processors allow businesses to accept a wide range of currencies and help calculate the exchange rate depending upon the type of currency.

Online Payments Are More Convenient:

Payment processing technology has grown so much that the customers can complete online payments without having the need for a physical card. In addition to cardless payment, there’s increasing popularity among other alternative modes of payment.

They Are Time-Consuming:

Online payments are not just convenient in terms of transaction speed, but they also eliminate the need for customers to enter a physical store and spend their time in the waiting line. Also, no one likes to be on hold; it should be a red flag when waiting time increases. On the other hand, online payments allow customers to have more choices on how to spend their time.

Online Payments Offer An Additional Layer Of Purchase Protection:

Buying from a small business, whether online or in-person, needs customers to have some sense of trust in the merchant with whom they are going to connect. Irrespective of how a business shows its returns, exchange or deliver customer satisfaction policies, the customer still hesitates to return in person.

Online payments are secure and come with an SSL certificate to ensure safety. When online payments made through the credit card offer some perks like guaranteed low prices for initial days, extended manufacturer warranty and the right to handle disputes, the customers will get peace of mind that they will be protected. Irrespective of customer policy, the customers will be able to build trust in a company that their money is protected.

They Offer Cost-Free Benefits:

Apart from all the impressive benefits customers gain from online payments, they cost nothing to the consumers. Additionally, online payments offer a value-added convenience without paying an extra amount.

Online payments also offer consumers a value-added convenience without letting them pay extra money. Though there might be some additional fees for accepting credit card fees, customers can negotiate a nominal fee involved in the transaction. Also, online payments give customers a smooth and hassle-free experience that they want at no cost.

Decrease The Late Payments:

Since online payments tend to save time as compared to other modes of payments, you may experience a delay in handling the bills. You can deal with payments from anywhere; it would be more convenient and time-saving. Also, by minimizing tardiness, you don’t have to keep sending payment reminders, and it helps collect revenue faster.

Digital Payments Accept A Wide Variety Of Payments:

Digital payments are of various types that give a variety of options to the businesses on how they want to manage their invoices. For instance, some businesses only accept certain credit/debit card payments, cash or sometimes checks if you get paper invoices. However, through online portals, you can offer more flexibility.

Through online portals, you can have more flexibility this way; the clients will not be restricted to one portal only. They can directly pay through any mode of payment.


While you are already managing a lot of things in a business, collecting revenue is something you want to be stress-free. Online payment, on the other hand, offers a hassle-free experience and a plethora of timesaving benefits. Additionally, COD is costly and unsustainable.

Do you prefer online payments over COD, do tell us in the comments below!

Author Bio:

Author Name- Megha V.

Author Bio- I am a Creative diginative who spends too much time on social media — interested in combining technology and creativity with my blogs – loving all things nerdy. Minimalistic design, organizing great events, and constant learning excite me.

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