Data from the National Observatory of Technology and Society (ONTSI) shows that in 2022, cash on delivery (COD) was the seventh most popular payment method for online purchases in Spain. At that time, just 2.1% of people preferred this method, down from 7.8% in 2020.

Although it has become less popular, some businesses in Spain still offer COD payments because they help build trust with certain customers. If your customers value the security of paying for their products upon delivery, this guide will show you how the payment method works, how to implement it, and the benefits it can provide.

What’s in this article?

• What is cash on delivery?
  
• How does cash on delivery work?
  
• How can businesses in Spain accept cash on delivery payments?
  
• Advantages and disadvantages of cash on delivery
  
• FAQs about cash on delivery
  

What is cash on delivery?

Cash on delivery (COD), also known as payment on delivery (POD), is an in-person payment method in which the customer pays for their order upon delivery at the designated address, instead of paying in advance.

The person delivering the product is in charge of collecting the exact amount from the customer before handing the order over to them. This money is then transferred to the business supplying the product or service.

How does cash on delivery work?

Although COD can vary in certain ways depending on the type of product involved and the business selling it—e.g., whether or not the customer needs to pay the exact amount in cash—this payment method generally operates the same way overall. Here’s a step by step overview of how cash on delivery works:

• The customer places an order and chooses COD: The customer visits the business’s ecommerce site and places an order. When selecting a payment method, they choose cash on delivery. While the amount isn’t paid at this stage, the purchase is considered valid. In accordance with the Law on Information Society Services and Electronic Commerce (LSSI), the business notifies the user that the order has been successfully registered.
  
• The business gets the order ready for delivery: The business prepares the order and hires a home delivery service that accepts cash on delivery. This method comes with certain fees, which we’ll cover later.
  
• The product is delivered by a third-party: The business in charge of delivering the order brings it to the address specified by the customer.
  
• The customer pays for the order: The delivery person is responsible for handing over the package to the customer, but the customer must pay the amount before they receive it. While cash on delivery payments were traditionally always paid in cash, more businesses are now accepting card payments through mobile devices with Tap to Pay or card readers integrated into their payment systems, such as those from Stripe Terminal.
  
• The business receives payment: After the delivery is completed, the delivery service transfers the collected amount to the ecommerce business, minus any applicable commission fees for handling the collection and delivery.
  

How can businesses in Spain accept cash on delivery payments?

If you have an online shop and sell physical products, you might want to think about offering cash on delivery payments. Here’s how you can implement this option:

• Set up the payment method: Ecommerce platforms such as PrestaShop, WooCommerce, or Shopify make the setup process much easier. For instance, if you use Shopify to build your online shop, you can easily add a COD payment method with a plugin such as EasySell, which adds the option to key areas of your site, including the shopping cart, product page, and payment gateway.
  
• Select a logistics partner: Hire a delivery service that accepts COD. In Spain, many delivery businesses provide this service. To choose the best one, consider the following factors:
  
  • Payment frequency: Verify the payout schedule—i.e., the amount of time after the customer confirms payment that you will receive funds. While some logistics partners transfer each collected payment to businesses as they process them, others group multiple COD payments into a single monthly payout.
    
  • Maximum amount of cash accepted: Find out the cash limit for the logistics business. For instance, MRW has a €1,000 limit for shipments from Spain to Portugal, although cash payments typically have a lower limit.
    
  • Fees: Review any additional charges for accepting cash on delivery payments. For example, with MRW, the fee is 6% of the amount to be collected, with a minimum fee of €2 and a maximum of €50.
    
• Establish fees: Decide who will cover the additional cost of COD payments (the customer, both parties, or your business alone). In the first two cases, it’s important to specify the extra amount so the customer knows exactly how much they are paying for the product, shipping, and the cash on delivery payment method.
  
• Define purchase eligibility: Limit access to COD payments if you think it’s necessary. Some ecommerce businesses choose to do this to lower the risks associated with this payment method. If you choose to limit COD, you can set the conditions for when the payment method is visible, so that it is only available for purchases that meet specific requirements. Some example conditions include:
  
  • The order reaches a minimum amount.
    
  • The order does not exceed a maximum amount if the payment is to be made in cash.
    
  • The order contains specific products.
    
  • The customer is registered on your ecommerce site and determined to be a low risk of fraud.
    

Advantages and disadvantages of cash on delivery

Advantages

Cash on delivery provides several benefits to businesses and customers in Spain. These include:

• Increased sales: COD can boost sales, as customers don’t have to pay upfront. This helps reduce cart abandonment and improves conversion rates.
  
• Reduced risk of fraud: Cash on delivery can help build trust with new customers by removing the fear of fraud. Although the approval of the anti-fraud law in Spain has also helped lower the risk, cash on delivery remains an important factor for those making their first online purchase.
  
• Secure payments: COD is a secure method for the buyer, as they pay only upon receiving the package and don’t need to enter their bank details online.
  

Disadvantages

Like any payment method, cash on delivery also has drawbacks, including:

• Customer conflicts: Disagreements can occur with the carrier if the customer wants to open the package before making the payment.
  
• Customers needing to accept packages in-person: The customer must be present at the time of delivery to pay in cash; other payment methods that include home deliveries don’t require this.
  
• Delivery refusals: There’s a chance the customer might refuse the order for various reasons, such as not having cash on hand or deciding to cancel the purchase. This second scenario is covered by the right of withdrawal.
  
• Delayed payment: The amount is only transferred or paid out when the delivery service pays it out, which can take anywhere from one week to a month after the product or service has been delivered, depending on the existing agreement. This has a direct impact on the business’s cash flow.
  

While cash on delivery has several advantages, its drawbacks should not be ignored. They are why many ecommerce businesses in Spain are turning to digital payment solutions as alternatives. Stripe Payments, for example, lets you accept the ecommerce payment methods your customers prefer. This option enhances the shopping experience and provides a level of security similar to offering cash on delivery: popular payment methods in Spain—such as Bizum or digital wallets—allow purchases without having to enter bank or credit card details.

And if you handle deliveries yourself—e.g., you own a restaurant that offers home delivery with COD—you can skip using cash entirely by equipping your delivery staff with Tap to Pay. This contactless payment method allows you to accept card payments directly from a mobile phone.

FAQs about cash on delivery

Do businesses have to provide change when accepting cash on delivery payments?

No, businesses don’t have to provide change, as delivery services aren’t required to carry cash; each business can establish its own policy on the matter. Many businesses request that customers pay the exact order amount to prevent delays and other issues.

What if the customer doesn’t have the money when the delivery arrives?

If the customer can’t pay for the order at the time of delivery, the order is considered refused. Depending on the delivery service’s policies, another delivery attempt might be made later, or the package might be returned to the ecommerce business, which will have to cover any costs from the failed delivery.

Is cash on delivery secure?

Yes, cash on delivery is one of the safest options for customers because it doesn’t require them to pay in advance or enter sensitive information such as credit card numbers on a shop’s website.

Do the most popular ecommerce businesses in Spain use cash on delivery?

Some major retailers, including El Corte Inglés and Zalando offer cash on delivery as a payment option. However, others, such as Amazon, do not accept this payment method.

Is the customer allowed to check what’s inside the package before completing the cash on delivery payment?

No, customers are not allowed to open their packages until payment is confirmed, based on the internal policies of the delivery service. If a customer wants to return a product after receiving it, they can do so according to the retailer’s return policy, just as with other payment methods.