The cross-border e-commerce industry is certainly no stranger to COD, which is a new transaction model innovated because some customers do not have credit or debit cards, or the ability to pay online.
COD is a way to order products online or by mail order, where the transaction is at the merchant's and/or shipper's risk and does not end until the customer receives the goods and pays for them. This type of transaction also protects consumers from fraudulent activity and fraud, such as identity theft and credit card theft by fraudulent merchants.
At the same time, however, COD may also work to the disadvantage of some consumers. For example, impulse spending may increase when a cash-on-delivery transaction method is selected. With no payment at the time of purchase, some consumers focus on the benefits of the purchase rather than the cost of the purchase. It is important that the purchase can be made at once or in a short period of time for the consumer to incur excessive cost expenses. By not taking into account the cost of the merchandise, some consumers may not budget for the purchase and may not be able to pay the price of the merchandise at the time of delivery. When a consumer forfeits payment or refuses to take delivery, the merchant must bear the cost of shipping and suffers further losses.
For merchants, offering a COD payment option may increase consumer spending on smaller branded items and increase consumer awareness of the product's brand. In addition, by not paying for goods through a bank's credit card, sellers can save money on transfers and other additional expenses, which can be passed on to consumers in more ways than one. As with buyers and sellers, COD can reduce fraud and abuse, such as false information about the buyer's identity (e.g., a customer using a stolen credit card to purchase goods), and can prevent legal disputes arising from post-payment.
However, COD also has a negative impact on seller-merchants. For orders that are returned unfinished, merchants bear their own delivery costs and lose more profit margin in the sales process. Typically in regions such as the Middle East, sellers who use this payment method are able to achieve significant growth in performance compared to merchants who do not accept cash on delivery.
However, in some Middle Eastern countries such as India and Pakistan, with the development of e-commerce, the form of payment by freight forwarding transactions are also popular among young consumers. They do not have the ability to pay online with credit card goods, and can only buy goods through the form of cash on delivery. So if you are engaged in cross-border e-commerce in the Middle East, you may want to try COD.
