What is the difference between COD and prepaid orders?

Cash on Delivery or COD is a popular method of payment for internet shoppers. When there is an emergency, this can be a life-saver, but there are several reasons why you should choose the prepaid option instead. It is good for you and India’s economy too.

As there is no need for authentication, you can complete prepaid orders quickly. Your pre-paid order makes a significant contribution to long-term economic growth.

What is Cash on Delivery or COD?

Difference between COD and Prepaid

One of the most popular methods of payment for online purchases in India is cash on delivery (pay on delivery). Most customers like receiving and viewing the merchandise before paying for it and COD payment has made this possible.

Cash on Delivery allows the consumer to pay for the product when it arrives rather than in advance.

What are Prepaid orders?

In prepaid orders, the vendor handles the shipping costs. The buyer or the receiver of the goods accepts full responsibility for the items once they arrive at their destination.  

The buyer pays for these orders in advance.

Why do people choose to opt for the COD option?

  • They may not be able to make payments online.
  • People don’t trust internet vendors.

Why has COD become so popular in India?

Difference between COD and Prepaid

The cash-on-delivery option is boosting e-commerce in India. As a result, it is a popular option for customers who lack the means to pay for their purchases online.

What is the procedure for COD orders?

A customer places an order on the website and specifies a delivery location.

Instead of paying for the goods at the time of purchasing them, the buyer selects the option to pay at the time of delivery.

The confirmed order will come with an invoice from the seller.

An employee of the seller or supplier picks up the shipment and delivers it to the customer’s address.

The delivery agent accepts cash or a credit card as a payment option from the customer. 

The logistics partner receives the COD payment and the amount gets deposited in the account. 

After taking out the handling fee, the seller receives the amount.

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Can you refuse to pay COD or Cash on Delivery?

If you’ve chosen to pay by COD or cash on delivery, you may be able to decline the delivery in most situations. Any other payment method would necessitate a conversation with the seller to determine the return of the product.

What Are the Advantages and Disadvantages of Cash on Delivery?

Difference between COD and Prepaid

The main advantages of COD are, 

  • When it is about COD for businesses, the payment term is shorter, and there is no delay when it comes to receiving cash. This basically protects businesses from the danger of not receiving payment from a consumer for goods. 
  • Consumers benefit from COD since it allows them more time to pay for the goods delivered. 
  • Cash on delivery permits purchasers who do not have access to credit to make purchases that they would not be able to do otherwise.
  • The payment time is shorter with COD than with other types of payment.
  • Cash on delivery helps with cash flow and planning.
  • You will be safe from online fraud that could happen while making payments.
  • Customers who do not have credit can purchase products with COD.
  • There is no need to be dependent on cards for payment.

The disadvantages of Cash on Delivery are, 

  • There is a higher possibility of refusing goods during delivery with COD
  • Buyers may find it more difficult to return things if they have already paid for them at the time of delivery. 
  • The costs that courier companies charge for cash on delivery orders could be more. 
  • COD has a greater chance of delivery refusal.
  • Returning things can be expensive for sellers who do not have a return infrastructure or support system in place.
  • It may be difficult for buyers to return things that do not fulfill their expectations.
  • The seller could face losses when the product is returned without payment.

What are some benefits of prepaid orders?

These are the advantages of prepaid orders,

  • The majority of e-commerce companies now use phone calls or text messages to verify the authenticity of COD orders.  There are many delays and additional costs because of this.
  • This is one reason why prepaid orders are much easier to handle.
  • Since the customer must pay with currency notes in order to use cash on delivery, the infection risk is increased and due to covid, this should be avoided.
  • Certain pin codes, particularly those in outlying areas, may not support COD deliveries. States that don’t have cash on delivery are still receiving deliveries of pre-paid purchases. 

Parceldeck is one of the best shipping aggregators in India. It supports many courier partners and handles both cash on delivery orders and prepaid orders.

  • In order to ensure that the money is received by the shipping partners and returned to the seller, safety procedures are required.
  • The vendors and the economy bear the additional weight of cash on delivery orders. Sellers must pay additional cash on the delivery collection fee to shipping partners for each order.
  • A package returns to the warehouse when the order is not delivered. To put it another way, this puts pressure on the profit margins of your business.
  • Online retailers may be able to pass the savings on to customers by cutting prices or spending more on product and packaging and employee well-being if these fees are decreased.
  • There are exclusive incentives, loyalty awards, and more offered.

So make sure that you use your debit card, credit card, net banking, UPI, or any other prepaid means to pay for your next order. 

You and the entire economy as a whole will be able to benefit from this. 

Bottom Line 


Ecommerce and online businesses have extended the reach of products to other sectors and provided lots of options for customers to select from. 

They can choose between COD and prepaid orders based on the best fit for them. This can help make an educated choice while you help the economy as well.