How does cash on delivery for online stores work?

by Galen Crout May 24, 2021

We can thank one critical development for helping the online shopping boom in the Philippines: the magic of cash on delivery (COD).

Before, online shopping was a luxury reserved for more affluent Filipinos with credit cards and, of course, a good internet connection at home. Then debit Visas and Mastercards started being accepted by online stores, which further democratized online shopping. More recently, most major e-commerce platforms and courier services have enabled just about everyone to pay for their online purchases with Cash on Delivery.

Though cashless payment methods are convenient for both buyers and sellers, there are some unique advantages to accepting COD payments.

Why should you accept cash on delivery for your business?

If you’re running an online business selling products, the rise of COD is nothing short of a blessing. In a nutshell, cash on delivery, while still a manual payment method, gives you one more surefire way of getting paid–especially with today’s services.

While accepting bank transfers and deposits enables you to maximize all possible payment methods for your business, it can be quite inconvenient. Online or mobile banking transfers take a lot of steps and details, and systems can be prone to failure. Not to mention that many Filipinos are simply unbanked—as of 2019, 51 million Filipino adults did not have a bank account, according to Bangko Sentral ng Pilipinas (BSP).

Given this statistic, if you accept COD, you open up your business to an entirely new demographic. The new customers you’ll be reaching won’t have to worry about credit/debit cards or the potentially unreliable transfers from online or mobile banking. For many in the Philippines, cash is still king. So, if you’re thinking about accepting COD, it’s not hard at all. This article will show you how to set up cash on delivery for your online business.

How to set up cash on delivery for Lalamove and Ninja Van

The best way to enable COD for your online business is through the shipping or courier service you plan to use to deliver your products to the buyer.

Don’t forget that shipping, especially if you’re hiring a third-party service to do it, is its own cost. Before you start selling, factor in your shipping costs in your products’ prices. If you’re able to deliver your products yourself, then that is even better. Not only can you receive your payments yourself, but you could also build rapport with customers, encouraging repeat business. (Just be mindful of any restrictions due to COVID-19.)

How do I set up cash on delivery for Lalamove?

Lalamove, one of the most popular shipping and courier services in the Philippines, has built-in support for cash on delivery. Lalamove offers three kinds of cash on delivery.

COD via Purchase Service

You can select Purchase Service under Additional Services when making your order on the Lalamove app. The Lalamove partner driver/rider will first pay you the amount your customer will pay, then collect COD when they successfully deliver the item.

COD via Multi-Stop and Cash Handling

Best for delivering many items to different customers, you can select Multi-Stop by setting many different drop-off points for your items, then select Cash Handling under Additional Services when making your order on the Lalamove app.

In this setup, your Lalamove partner driver/rider will collect COD payments, then return to you to give you your sales and collect their delivery fee.

COD via Queueing Service and Cash Handling

Similar to Multi-Stop and Cash Handling, this setup is also ideal for multiple deliveries. You can also select Queueing Service and Cash Handling under Additional Services when making your order on the Lalamove app.

The partner driver/rider will still collect payments from your customers but will go to a bank instead to remit or deposit the sales to your bank account. If you select this option, make sure you are mindful of banking hours.

These COD features are easily accessible from the Lalamove app, or if you want a more permanent partnership, you can sign up for a corporate account on the Lalamove website.

How do I set up cash on delivery for Ninja Van?

Ninja Van is also another popular courier delivery service that accepts cash on delivery in the Philippines. Many businesses favor them for COD and bulk delivery features.

Ninja Van’s easy-to-use order management platform makes it simple for all partners to set a COD value for each shipment, whether it’s a single order or multiple uploads. You can also set a COD value if you’re uploading orders in .csv format.

If you choose to ship deliveries and collect COD with Ninja Van, you’ll also have to know that their setup is slightly different. Unlike Lalamove, which can remit your sales back to you either in person or via the bank, Ninja Van has a set remittance schedule. They can remit your money via check or bank deposit monthly or bi-monthly (every 15th and 30th of the month), and they will charge you a COD collection fee.

To find out how you can start using Ninja Van either for single deliveries or a full-time partnership, check out their website.

Frequently asked questions about cash on delivery in the Philippines

Do Lalamove and Ninja Van charge me extra for cash on delivery?

Yes. Lalamove charges up to an additional Php 100 for Cash Handling, Purchase Service, and Queueing Service. Ninja Van charges 3.5% or Php 25, whichever is higher, of each cash payment collected.

Can the couriers handle large amounts of cash?

Yes, there are no stated amount limits for cash payments received from customers, so they can handle as much money as needed.

What are security concerns around cash on delivery?

The risks surrounding cash on delivery are your usual concerns involving physical cash. The money can be stolen or lost, and large amounts can potentially endanger the courier making the collection. However, these are far few and in between and many courier services are insured against such instances.

Do any other couriers offer cash on delivery in the Philippines?

Yes, there are some other couriers in the Philippines that also offer cash on delivery services. Couriers such as LBC, Transportify, Mr. Speedy, and 2Go offer them for online businesses. It’s best to check with the courier closely to see if they have a COD option, and get the courier that’s right for your online business.

How to accept cash on delivery for your products

Now you know how simple and easy it is to accept cash on delivery for your products, all you’ll have to worry about is promoting your goods on the right channels (and advertising that you accept COD). Once potential customers see those three wonderful letters in the description, you can be sure that they’ll be even more interested in making a purchase.

Now that one important payment method is taken care of, it’s time for you to get to work on running and growing your business.

And if you need expert help in setting up your business online, why not try Shopify? For a monthly fee, you can start, market, and manage your business on a platform that helps you do everything you need to build your own brand online.