Cash on Delivery for Small Business in India: Risks and Tips
Many Indian buyers still prefer to pay when the product arrives. Offering cash on delivery can bring more orders, but it also brings fake orders, refusals and cash handling trouble. Here is how to use it carefully.
Updated 25 October 2026 · ShopShare Guides
Quick answer
Cash on delivery can increase orders because buyers trust paying on arrival, but it carries risks like fake orders, refused parcels and wasted delivery costs. Reduce the risk by confirming every COD order on WhatsApp, limiting COD to local or lower-value orders, taking a small advance for courier orders, and keeping UPI as an option.
COD builds trust with first-time buyers
Refused parcels cost you delivery both ways
Confirm every COD order by call or WhatsApp
Take a small advance for costly or courier orders
Offer UPI at the doorstep as an alternative
Step by step
Decide where COD appliesChoose whether COD is for all orders, only local delivery, or only orders below a set amount, for example an approximate ₹1,500.
Show it clearlyMark which products allow cash on delivery so buyers know before they message you.
Confirm the orderMessage or call the buyer to confirm name, address, item and amount before dispatch.
Take an advance when neededFor courier, custom or high-value orders, ask for a small advance or delivery charge by UPI first.
Collect safelyAsk buyers to keep exact change or pay by UPI QR at the door. Record each payment the same day.
Why buyers ask for COD
A new buyer does not know you yet. Paying on delivery feels safer because they see the product first. For many home sellers, offering COD to first-time local buyers is a simple way to win trust, and many of those buyers switch to UPI next time.
The main risks
For custom-made food, cakes or personalised gifts, a refused order is a full loss, so COD without any advance is risky for these.
Fake or prank orders that waste your time and stock.
Buyers refusing the parcel at the door, so you pay delivery both ways.
Courier COD remittance taking days to reach your account.
Handling cash, keeping change and tracking who paid.
Simple ways to reduce risk
Confirm every COD order in a chat before you pack it. People who do not reply to a confirmation are often not serious. Save the chat as a record. For courier orders, many sellers take the delivery charge in advance by UPI and collect the rest on delivery.
On ShopShare you can mark which items allow cash on delivery, so buyers see it on the product before they tap Order on WhatsApp.
COD through couriers
Many courier and shipping services offer COD collection and send the money to you later after deducting a fee. Check each service's current COD charges, remittance time and return-to-origin charges before choosing one, as these differ and can change.
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It can be, especially for local buyers and first orders, because it builds trust and can bring more sales. The downside is fake orders and refused parcels. Many small sellers offer COD with conditions, such as order confirmation, a value limit or a small advance for courier orders.
How do I stop fake COD orders?
Confirm each order by WhatsApp message or call before dispatch, and only ship once the buyer replies. Check the address and phone number look real. For repeat no-shows, stop offering them COD. Asking for a small advance on higher-value orders also filters out non-serious buyers.
Can I ask for an advance on a COD order?
Yes, many small sellers ask for a partial advance or the delivery charge upfront, especially for courier, custom or expensive orders. Tell buyers clearly before they order, explain why, and accept the advance by UPI. The balance can then be paid in cash or UPI on delivery.
What happens if a buyer refuses a COD parcel?
With couriers, the parcel usually comes back to you and you may be charged for both forward and return delivery. With local delivery, you lose the trip and possibly the product if it is perishable. This is why confirmation and advances matter for COD.
Do courier companies offer COD for small sellers?
Many courier and shipping aggregator services in India offer COD for small sellers. They collect cash from the buyer and transfer it to you after a few days, minus a fee. Compare current fees, remittance timelines and return charges on each provider's website before signing up.
Should I offer UPI instead of cash on delivery?
Offer both if you can. Many buyers who choose COD are happy to pay by UPI when the delivery arrives, which saves you from handling cash and change. Keep a printed UPI QR with your delivery person, and confirm the payment on your phone before handing over the product.
