When running a D2C or online business in India, the "COD vs Prepaid" debate never seems to end. Every brand team, founder, and marketer has their own experience with both methods - and interestingly, customers do too.

This article summarises a real multi-user WhatsApp discussion where shoppers, marketers, and store owners shared their honest habits and challenges with Cash on Delivery (COD) and Prepaid payments.
If you're launching or scaling a D2C brand, these insights will help you decide what to prioritise right now.

Customer Behaviour: Why People Choose Prepaid or COD

1. Many customers prefer Prepaid for convenience

Several participants said they “almost always choose prepaid” because:

• UPI makes checkout fast and simple

• No extra COD fees

• No need to keep cash

• They may not be home to collect COD parcels

• Refunds on prepaid are easier and faster (back to the original payment method)

For digitally comfortable shoppers under age 35, prepaid adoption is naturally higher.

2. COD is popular for first-time orders

Some users prefer COD only for their first order from a new brand, mainly to:

• Check whether the store is trustworthy

• Confirm the product is genuine and delivery is reliable

Once trust is built, they switch to prepaid.

3. Trust is the ultimate decision maker

Users openly said that if the website looks trustworthy, well-managed, and transparent, they choose prepaid.
But if the brand looks new or unsafe → COD.

One user added:

“If it’s not Amazon or Flipkart, I always choose COD.”

This directly shows the trust gap new brands must overcome.

What Store Owners and Marketers Say

1. Prepaid = More Predictable Cashflow

Founders unanimously said prepaid helps with:

• Stable working capital

• Lower RTO (Return to Origin)

• Lesser operational chaos

• Easy refund processing

This is especially important for small or bootstrapped D2C brands.

2. COD = Higher Reach, More Customers

Brands that activate COD almost always see:

• More first-time customers

• Higher order volumes

• Better acquisition in Tier-2/3 towns and older demographics

However, this comes with a cost — higher RTO and cash handling hassles.

3. Logistics companies sometimes discourage COD

One participant even experienced delivery agents trying to talk them out of accepting COD orders.
Reason? COD adds work and risk for courier staff too - so failed attempts are common.

Interesting Tactics Used by D2C Brands

1. Automated WhatsApp verification

A brand mentioned that once they implemented WhatsApp confirmation for COD orders, returns dropped significantly.

2. Incentives to convert COD → Prepaid

One store tried giving 10% off if COD customers switched to prepaid, but very few customers opted in.
This shows: discounts don’t fully solve the trust issue.

3. Partial COD (via Gokwik and others)

Marketers mentioned Partial COD as a great middle-ground:

• Customer pays a small amount upfront

• Trust barrier reduces

• RTO risk drops

4. Message Commerce + COD can outperform websites

A founder shared a successful experiment from a Qatar quick-commerce startup:

• Orders taken via WhatsApp

• Deliveries done on COD

• Sales increased

• Customer referrals rose

• Trust strengthened

• Delivery cost dropped due to more frequent, smaller orders

A great reminder that sometimes simple systems beat fancy websites.

A Few Fun Customer Perspectives

• “If I feel like a rich man, I choose COD. If it’s urgent, prepaid.”

• “I never save my card details even if I trust the website.”

• “Older people and rural customers still strongly prefer COD.”

These honest comments reflect the psychological side of buyer behaviour.

So, What Should D2C Brands Do in 2025?

Here’s the balanced takeaway:

1. Offer both - but optimise around prepaid

Because prepaid:

• stabilises your business

• reduces RTO

• improves cashflow

• simplifies operations

2. Use COD strategically

COD is powerful for:

• customer acquisition

• new or unknown brands

• tier-2/3 adoption

• older shoppers

But reduce risk with:

• WhatsApp confirmation

• partial COD

• NDR follow-ups

• trust-building: reviews, real photos, faster support

3. Focus on Trust

Ultimately, most users said they choose prepaid only when they trust the brand.

Trust beats discounts.
Trust beats ads.
Trust even beats payment preferences.

Final Thought

COD is a reach-expanding tool.
Prepaid is a business-stabilising tool.

The best brands use both, but nudge customers toward prepaid through trust, reassurance, and great buying experiences.

This post is supported by FixMyStore.com - experts in optimizing Shopify stores for speed, conversion, and performance.