What is Cash on Delivery and why is it popular in the Philippines?

Online shopping has grown immensely in the Philippines. According to a report by Visa, more Filipinos now go on digital commerce platforms — with close to 9 in 10 people increasing their online shopping activities in the past year. And in all these transactions, one thing remains true: cash is still king. Despite the rise of a range of alternative payment methods, Cash on Delivery (CoD) is still one of the preferred payment options in the Philippines. This stems mainly from the fact that many Filipinos remain unbanked.

To give you an idea on what exactly the meaning of Cash on Delivery is, we’ve detailed how CoD couriers work, the benefits of CoD, and how to integrate it into your online store.

How do CoD couriers work? 

The CoD process is really simple: customers select CoD as their payment option once they check out. They will then only have to pay for their order once it arrives. Once their delivery comes, the buyer can then check the product, pay, and complete the transaction. When the seller receives the payment, they can close the order and mark it as a completed transaction. 

The Cash on Delivery couriers will collect each payment, and will be in charge of remitting everything to the merchant. Once the merchant receives all the payments, they can close the orders and tag them as a completed transaction.

Offering Cash on Delivery in the Philippines is convenient because not everyone can do online payments. And from a merchant’s point of view, cash handling is simple and does not involve complex processes. The profits from a sale are completed instantly, and the possibilities of payment failures are ruled out. 

Understanding the Preference for CoD in Philippine Logistics

Even up to this day, the Philippines remains a cash-based economy. Thus, Cash on Delivery is important for both Philippine logistics companies and merchants alike. If that’s not enough reason for you to consider CoD, here are a few things you should know about Filipino consumers.

Living paycheck to paycheck

Many Filipinos still live in a paycheck-to-paycheck lifestyle. This means, the money they make is only enough for them to spend on their needs and essentials. Merchants who offer Cash on Delivery grant them the time they need to save up for their purchases. This is highly important for them, especially if it’s something they really want but currently don’t have enough resources for.

In-person-like shopping experience

When looking for a logistics partner, go for those with a Cash on Delivery option because it enables an in-person-like shopping experience to a certain degree. In physical or offline stores, shoppers have the chance to examine a product before deciding to buy it. Similarly, CoD allows online shoppers to check the products that arrive before paying for it to make sure that it isn’t damaged and is what they ordered.

Added layer of protection from scams

Because of the growth of E-commerce, digital scams have also become more rampant. Rather than keying in their card details, Filipino shoppers prefer cash payments because it’s more transparent and secure for them. Cash on Delivery is essential for Philippine logistics because it offers another kind of protection. It gives consumers assurance that they are not being scammed or tricked.

CoD is simple and easy

Essentially, many Filipino shoppers prefer CoD because it’s easier to manage. Working with logistics partners with Cash on Delivery capabilities opens your shop to a whole demographic – those who are not tech-savvy when it comes to digital/online payments and those who do not have credit/debit cards. Offering CoD is a definite plus for you for inclusivity!

Leaning towards flexible arrangements

Lastly, merchants must remember that Filipino consumers have varying payment preferences. Offering Cash on Delivery equally benefits merchants because it shows your flexibility in catering to different types of consumers. Filipinos tend to favor shops that have flexible payment options primarily because it suits their needs, lifestyle, or their current situation.

Benefits of Cash on Delivery

Now that you know why there’s a preference for CoD, let’s look at how it helps both merchants and customers. Providing Cash on Delivery has a number of benefits, especially here in the Philippines. Here are a few examples: 

Benefits of CoD for merchants

Creates a wider customer reach

Millions of Filipinos remain unbanked, and if you opt to only offer online payments to your customers, you’re discouraging these Filipinos from making a purchase with you. This limits your customer reach, which means you’re losing the opportunity to make more sales and find potential customers. 

By providing Cash on Delivery, you can attract customers who prefer CoD as a payment method. Reasons for this may be because they don’t have a bank account, they aren’t as knowledgeable in e-payments, or they are more complacent with the ‘traditional’ way of paying for online orders.

Convenience attracts more customers

Among the benefits of adopting Cash on Delivery to optimize your business is that it’s convenient for your customers. 

Cash is one of the common forms of payment, and paying through CoD is a very straightforward process. Moreover, customers don’t have to go through tedious processes of filling out details when paying online. CoD also helps prevent customers from falling victim to online scams and fraudsters, even more so if they’re not tech-savvy. 

When you offer Cash on Delivery in the Philippines, you can cater to many potential customers because of how easy it is, and how comfortable they are with it. Customers value convenience, and it is one of the main reasons they patronize a business aside from price points and good deals. 

Gives customers flexibility

Just because a customer has a debit or credit card, doesn’t mean that he or she will always opt to pay every purchase with it. Similarly, offering CoD doesn’t ensure that most of your customers will always pay with cash. Offering CoD means that your business acknowledges how payment option preferences aren’t set in stone — it varies from purchase to purchase. 

One of Cash on Delivery’s benefits is that it lets your customers be flexible with how they pay for each order. It’s not about which payment method is better; it’s about catering to the different choices of your customers. 

Builds brand trust

Offering CoD elicits a greater sense of trust in Filipino customers because they receive their items before paying for it. They can inspect whether or not the item really is what the online shop promised, and if it has arrived in good condition. Providing CoD also shows that you’re aware of the factors you should consider while navigating the local E-commerce industry.

Benefits of CoD for customers

Gives customers the luxury of time

When you provide CoD, you give your customers the luxury of time in two ways; first, you give them time to check their packages and make sure everything is as it should be. Once they’re done, that’s the only time they need to pay.

Second, you also give them more time to come up with the money they need to pay for their order. These instances may be rare, but a few hours or even a day can make the difference between a customer being able to pay for an order, and that customer not being able to. 

Eliminates the stress of refunds

In the event that you, as a business, are unable to fulfill a customer’s order for whatever reason (e.g., a stock shortage) they may opt to cancel their order with you. On the other hand, they may also decide to cancel their orders for reasons completely unrelated to your service.

By providing CoD, you remove the stress of refunds, both for you and your customers. You won’t need to coordinate with them about it, or answer messages asking for follow-ups on the refund. 

Helps customers avoid online fraud

As a business, it’s your responsibility to provide secure payment options for your customers. However, not all customers are tech-savvy, and these customers are more prone to being victims of online fraud. Maybe you have secure payment methods, but you can’t say for sure that the same goes for every other online store.

By providing CoD, you help customers feel at ease because they know they can just pay with cash, and that they don’t need to share sensitive information online. This is an important benefit of choosing Cash on Delivery.

How to Integrate Cash on Delivery into your Online Store

Convinced that Cash on Delivery provides many benefits? It’s now time to integrate it to your shop! Whether you’re a startup or a well-established business, Cash on Delivery is vital to your online store’s payment methods so you can cater to more Filipino customers. Here are the ways you can do it.

Direct to couriers

Many local couriers in the Philippines now offer Cash on Delivery services for online stores. If you’re operating outside an E-commerce platform, you can offer this payment method through your preferred couriers.

Couriers offer different arrangements when it comes to Cash on Delivery. One arrangement sees their riders paying for the goods upon pick-up and collecting payments after dropping them off. Another is through cash handling where they collect all payments from multiple deliveries. They can either give your earnings in person or remit them through bank deposits.

There are also couriers that offer single or bulk deliveries but follow a remittance schedule. This means that they’ll collect payments within a certain period and remit payments based on the dates agreed on.

Via E-commerce sites

Popular E-commerce sites like Lazada and Shopee make it easier for sellers to offer Cash on Delivery for their online stores. You can actually do this through their respective apps or websites.

Simply go through the settings and browse through your shipping information. When you’ve located the “Enable Cash on Delivery” or “Enable CoD option,” one simple tap and it’s already activated.

Offering Cash on Delivery for your online store via E-commerce sites is also more convenient because they already have courier partners. Along with enabling the CoD option, you can also choose which couriers you’d like to make available to your customers. Just remember that shipping rates vary for each courier.

Payments will be remitted to your bank account either in real-time or based on a schedule, depending on which site you choose to work with.

Through E-commerce enablers

Similar to E-commerce sites, E-commerce enablers usually have many courier partners. What makes working with them more efficient is that they also have access to different E-commerce platforms.

With Payo, integrating Cash on Delivery to your online store is simple and easy. If you’re already on Shopify, all it takes is one tap of Payo’s Cash on Delivery plug-in. It will instantly be available to your customers upon checkout.

When it comes to payments, Payo understands that your customers’ courier preferences vary. To streamline this, Payo collects payments from riders and remits them to you in one go. Because of Payo’s digital capabilities, you can track payment collections better and see the status of deliveries in real-time. You can also choose Advanced Remittance to receive your payments even before the couriers remit their collections. 

These are the multiple ways to go about offering Cash on Delivery in the Philippines. But why stop there? Payo offers other services that can help optimize your entire E-commerce journey.  Whether it’s Warehousing, Fulfillment, or Live Customer Support, Payo can help you digitize your operations so you can focus on building a better business.

Interested in Payo’s E-commerce services? Sign up with Payo today or send us a message at [email protected]. We’re happy to help you out!