Why India still buys on COD, and why that is shifting
COD survives in India because of trust, not technology. But prepaid share is climbing fast. What the shift means for D2C brands.
If you sell online in India, cash on delivery is not a legacy option you can switch off. Depending on whose data you read, COD still accounts for roughly 45 to 55% of D2C orders, and more than half of orders in tier 3 cities. ClickPost's festive-season analysis of over 4.25 crore shipments put COD at 52% of tier-3 orders in 2025.
The reasons are about trust, not technology. UPI is everywhere; the payment rails are not the constraint.
Customers pay at the door because they have been burned: orders that never arrived, products that did not match photos, refunds that took weeks. Paying on delivery transfers the risk back to the seller. For a first-time buyer from a brand they found on Instagram, COD is the rational choice. There is also a practical layer: in many households the person who orders is not the person who holds the UPI PIN, and cash is simply easier.
Brands keep COD because removing it costs orders. Base.com's guide to COD management puts it plainly: removing COD is not a realistic option for any brand selling beyond the top eight metros. Shorages found the same in the UAE: merchants reported up to 30% more orders when COD was offered.
The shift toward prepaid is real and fast. ClickPost's analysis of 635 million orders found prepaid reached 41% of all orders in 2025, up from 32% the year before. Metro markets led at 46%, but the fastest growth was in tier 2 cities, and even tier 3 reached about 34.5% prepaid. GoKwik reported that during the 2025 Republic Day sale period, prepaid orders surpassed COD across its network for the first time, with UPI leading.
Two forces are driving this. Trust is compounding: every successful delivery makes the next prepaid order easier. And UPI removed the friction that made prepaid feel like a commitment.
Do not plan for a world without COD. Plan for a world where the COD mix shrinks at the top of the market and stays heavy in the geographies driving new growth. Tier 2 and 3 cities now account for the majority of order volume in ClickPost's data, and those are exactly the places where COD dominates.
So the practical question is not "how do we eliminate COD". It is two questions. How do we make prepaid attractive enough to keep winning the customers who are ready to switch? And how do we run the COD that remains without bleeding margin on failed deliveries? The second question is what most of this series is about.