Cash on delivery (COD), also known as payment on delivery, is a payment method that’s quite common in the Italian market. It allows you to pay cash to the courier upon delivery of the goods, instead of paying online in advance.

But what does COD mean, and why is this method still used despite the expansion of digital payment methods such as credit cards, wallets, or wire transfers? In this article, we will look at how COD works, the challenges and risks for businesses, the benefits for customers, the associated operating costs, and how COD compares to digital payments. If you have an ecommerce business or are planning to set one up, understanding the pros and cons of this payment method will help you decide whether to offer this option in your ecommerce store or opt for more efficient alternatives.

What’s in this article?

• Cash on delivery in Italy
  
• What is cash on delivery and how does it work?
  
• Challenges for retailers
  
• Costs and operational challenges
  
• Benefits for customers
  
• Pros and cons of cash on delivery
  
• How Stripe Payments can help
  

Cash on delivery in Italy

Cash on delivery has historically been one of the most popular payment methods in Italy, because being able to pay upon delivery generally inspires customer confidence. Today, however, its importance is significantly diminishing. According to the NetRetail 2025 report by the Netcomm eCommerce B2C Observatory of the Polytechnic University of Milan, only 11% of online transactions in Italy are still made upon delivery or use of the service. Within this percentage, cash payments to the courier (traditional COD) represent just 1.2% of the total, confirming a sharp decline compared to 2020, when COD was used by as much as 17% of Italians.

Despite the rapid growth in the use of online payment methods, which are gradually replacing COD, this method is still relevant in specific customer segments: primarily among those who do not trust paying online in advance, those who prefer to use cash, and those who see COD as a greater guarantee of security.

What is cash on delivery and how does it work?

Let’s now take a look at what COD is and how it works. In practice, the process is simple:

1. The customer selects the option to pay COD on the ecommerce site.

2. The courier responsible for the shipment receives instructions to collect the amount.

3. Upon delivery, the customer pays in cash or, in some cases, with a portable point-of-sale (POS) terminal (although cash is still the predominant method of payment).

4. The courier transfers the money to the business, often withholding a commission.

The meaning of COD is therefore simple: the customer only pays when they receive the goods, without paying anything in advance. In this sense, paying on delivery can be perceived as offering greater security, especially by those who fear online fraud or prefer not to share their card details. So it’s not surprising this method is still chosen by those who are unfamiliar with digital payments, who don’t own electronic devices, or who simply want greater control over their purchases.

Challenges for retailers

While COD offers security and confidence to the customer, it presents a number of complexities for the seller. The main challenges can be summarized in four areas:

• Risks of cash on delivery
  There’s always a possibility that a customer will refuse a package upon delivery. Every rejected order entails shipping and return management costs that your ecommerce business might not recover. In the long run, a high waste rate can seriously affect a business’s profit margin, especially in sectors with low unit values.

• Complex operational management
  With COD, the courier is not only responsible for delivery but also collects payment. This entails additional procedures, such as the transfer of collected sums and the reconciliation of payments, resulting in an increased administrative burden. Furthermore, as a business, you have less direct control over the collection, which makes you dependent on the efficiency of the logistics partner.

• Slowdown in cash flows
  With digital payments, the amount paid is available almost immediately, whereas with COD, the money arrives several days later, when the courier pays it to the business. This delay can create liquidity problems, especially if you run a small business that needs to collect quickly to pay suppliers, purchase stock, and cover daily operating expenses.

• Uncertainty
  COD payments offer no guarantee to the seller until the moment of delivery. If the customer refuses the package, payment will not be made and the business will still have to bear the costs of shipping and handling the return. This unpredictability makes COD a difficult method to manage in terms of planning and growing your business.

What are the disadvantages of cash on delivery?

As a recap, the disadvantages of COD are the additional costs and risks it generates for the seller: the customer can refuse a package upon delivery, resulting in wasted time and nonrecoverable shipping costs. Added to this are the fees charged by couriers, delays in collection, and more complex administrative management compared to digital payments.

Costs and operational challenges

If you decide to offer COD in your ecommerce store, you should be aware that this option involves additional costs and more complex processes than digital methods:

• Additional fees
  Each courier applies a fee to manage payment collection: this might be a fixed cost per shipment or a percentage of the amount, usually 2% to 3%. These expenses add to the normal shipping cost and reduce your margins. For this reason, many businesses choose to pass on part of the cost to the customer by applying a surcharge, which, however, can make the purchase price less competitive.

• Administrative management
  Unlike with digital payments, where crediting is immediate and traceable, with COD you will have to manually reconcile each transaction: this means checking that the amounts transferred by the courier correspond to the orders delivered, managing any discrepancies, and accounting for the receipts over a longer period of time.

• Return costs
  If a customer refuses a package, not only will you receive no payment, but you will also have to cover the cost of returning the goods. In some cases, you could end up with good-as-new products that you’re unable to sell, resulting in further losses.

• Reduced logistics efficiency
  With COD, the courier becomes a financial intermediary as well as a transporter, which lengthens delivery times and increases the possibility of errors. In practice, you are giving up one of the main benefits of ecommerce: the speed and automation of payment processes.

In summary, COD can help you attract customers who are still wary of online payments, but if you fail to manage the process carefully, it can turn into a hidden cost that weighs on the sustainability of your business.

Benefits for customers

You might wonder why some Italian online shoppers continue to prefer COD. Let’s take a look at the main benefits for customers:

• No credit card or online account required

• Customer only pays when they receive the product

• Customers might perceive lower risk of online fraud

For these reasons, there are still customers who look for ecommerce sites that offer this payment option when they need to make an online purchase. Paying COD therefore remains a demand for part of the market, especially among the less digitized segments of the population.

How secure is cash on delivery?

COD is considered secure, especially from the customer’s point of view, because it allows them to pay only upon delivery without entering card details or online account information. This reduces the perception of risk of digital fraud. However, security is lower for the seller: the ecommerce company must rely on the courier for collection, wait longer for payment, and risk having the package refused, which could result in financial loss.

Pros and cons of cash on delivery

Let’s review the potential benefits and drawbacks of COD to help you decide whether it’s worthwhile to offer this payment method on your ecommerce site.

How Stripe Payments can help

If you want to offer your customers modern and secure alternatives to cash on delivery, you can do it easily with Stripe Payments. Here's how Stripe Payments can help you:

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
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Learn more about how Stripe Payments can power your online and in-person payments, or get started today.