Online shoppers and those who operate in eCommerce businesses may know the term cash on delivery or COD. This is a method of payment where customers pay cash or credit card directly to the vendor/courier after they receive the product. The online transaction method has become one of the most popular means of purchasing and selling items.
When it comes to shopping online, COD has become the norm in almost all nations where internet businesses have flourished. About 83% of consumers in India prefer to pay for online purchases using cash on delivery. Due to many reasons, Cash on Delivery has increasingly become the preferred mode of payment across India. In India, many people do not have the necessary awareness or infrastructure to make online payments. Furthermore, many people do not own smartphones or possess bank accounts that would allow them to use online banking.
Advantages of Cash on Delivery (CoD)
A key benefit of COD for customers is that they can only pay when they get their product in hand. There are no risks of losing money in this way. As an example, if you pay online in advance and then the seller fails to deliver, your money remains stuck with the seller. When it comes to cash on delivery payments, there is no such risk involved.
It is also possible to check the product and ensure that everything is working correctly before paying. The product can always be returned if you find that it is defective or the outcome is different.
One other great advantage of cash on delivery is that it does not require credit cards or debit cards. In suburbs or rural areas, where many people do not use cards, this is an important factor. Your order is delivered, you review the product and pay for it, the transaction is completed. The process is simple and convenient.
Disadvantages of Cash on Delivery (CoD)
The problem with cash on delivery is that it leaves the seller vulnerable to losses when customers return products without paying for them. As a seller, all your effort and money went into delivering the product, but it was ultimately replaced. This leads to a revenue loss for you.
When your store receives a steady flow of orders, you can partner with prominent shipping companies & negotiate on their terms for COD orders with no extra charge. When you are a startup, however, you have to check the additional cost the shipping provider charges for COD orders. Most of the time, the additional cost is charged to your customers, but that adds to your overhead costs and enables your customers to compare the price of your product with competitors' before choosing a site from which to make their purchase.
In the case of cash on delivery, there have been instances of fraud. Due to the lack of authenticity of the available customer information, fraud is more likely to occur.
As mentioned above, COD orders, if returned by the customer, will incur courier charges. If the order is damaged during transit, that loss is your responsibility. Furthermore, the customer may take some accessories from your product if they open it to check it. There are shipping companies that will protect you from transit damage, but none will stop customer fraud if it has occurred.
The solution to all the CoD problems:
In e-commerce, escrow payments can help reduce fraudulent activity. In escrow payments, the online marketplace only approves the transfer of payments to the seller after the buyer confirms that the goods have been received in good condition.
Escrow accounts are mechanisms used in sales to guarantee that the seller gets paid and the customer gets the product or service. In order for this to work, the transaction amount is first delivered to an external party, known as the escrow agent, rather than paid directly to the seller.
There are several advantages of using an escrow account for both buyers and sellers.
Why Sellers Need To Use Escrow Service - By using an escrow service, a seller can verify the buyer's identity and confirm the funds are present during the transaction. After receiving the funds, the escrow company or an agent will notify the seller when the item can be shipped to the buyer. Because the seller is confident that the buyer will be able to buy the item, it is safe to ship it to the buyer.
Why Buyers Need to Use Escrow Services - When you buy high-value goods from an unknown source, there are certain risks you take on. There is no way to determine whether an organization is reliable, so you could be scammed. Making a purchase with the help of an escrow service gives you the assurance you need. When you use escrow payment, the funds won't be released to the seller until you receive the item and are satisfied with the transaction.
Also Check: Marketplace future payment: Escrow payment vs Regular payment
Digital Escrow Service In India
Digital escrow services are offered by many companies in India. Among the most trusted is Vouch.
Vouch’s Digital Escrow service is a transparent way for buyers and sellers to build trust and secure a clean transfer of product and payment. Sellers can feel assured that they will be fairly compensated promptly, and buyers will feel confident that their order will be delivered as expected and on schedule. As a seller, if you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply say no and ask him/her to proceed with the transaction through Vouch.
Vouch Digital Escrow uses a non-interest-bearing escrow account for all transactions in India and keeps you updated and informed at every step of the transaction process till the end. Vouch’s professionals are always available to assist you with all queries that you may have during the entire transaction process. There is no scope for deceit or fraud since the payments, shipping, delivery, and execution are carried out under the honest and watchful eyes of the Vouch’s professionals. With Vouch, any business transaction becomes transparent, uncomplicated, and hassle-free.
Check back here to learn more about Escrow and how to protect yourself from fraud.
Safety is not just about protecting your credit, debit card number, and UPI accounts. It's about having control of your money till you've received the product or service you bought online!
Now that we have you up to date on online safety, let's get your transactions secure on Vouch. It's just a click away.
