Should You Ask for Prepayment or a Deposit on COD Orders?

Every owner with a refusal problem asks this sooner or later. The logic looks airtight: if the customer has already paid, they can't refuse the parcel. That part holds. What it leaves out is how many customers will never pay first, and what the discount costs you on the ones who would have accepted the parcel anyway.

Should I ask for prepayment or a deposit to reduce COD returns?

Offer prepayment, don't require it. A prepaid order almost never comes back: in the Offer Builder I model it at a 97% delivery rate, against roughly 75% for a typical cash-on-delivery order. But only a small share of the Egyptian market pays upfront, so prepayment fixes refusals on the orders that use it and does nothing for the rest.

The useful question is how many buyers you can move to it without losing the ones who won't move. That depends on the discount, on where the option sits on the page, and on whether the product has a refusal problem in the first place.

How much discount should I give for paying online?

I start from 10% off for paying online. Take a 1,000 EGP product. On cash on delivery at a 75% delivery rate, you collect about 750 for every order placed and pay outbound shipping on the refused ones for nothing. Prepaid at 900, delivering at 97%, you collect about 873 per order placed, or roughly 851 after a 2.5% gateway fee.

On most products with a refusal problem, the discounted prepaid order leaves more money per order placed. You can run your own figures through the COD break-even calculator before you change anything on the store.

Where the option sits matters as much as the size of the discount. Show the prepaid price next to the buy button as a second choice, written plainly. A pop-up after the order has been placed asks the customer to reopen a decision they already made, and most won't.

Is a deposit on COD orders a good idea?

Only on a narrow set of products. My line is the same one I use for cutting products: if a product delivers under 60% consistently for two months, it needs to stop, change price, or be sold paid in advance. A deposit is the softer version of that last option.

On a product delivering 80% or more, a deposit adds friction for the four buyers out of five who were going to pay anyway. It also creates work. Someone has to chase the transfer, match it to the order, and refund it when the item is out of stock or the customer cancels inside your policy. On a store with real volume, that admin is a cost nobody puts in the break-even sheet.

I'll say the unpopular part: most owners who ask about deposits would get more from fixing why the product gets refused than from asking strangers to transfer money before they trust the store.

Why does forcing prepayment usually backfire?

Because refusals are a symptom. Cancellation rates in Egypt sit between 15% and 40% depending on category and price, and anything above 30% almost always traces back to the ad, the product page, or a confirmation call that came too late. Forcing prepayment hides that problem and costs you every buyer who only orders cash on delivery.

The cheaper fixes come first: an ad that shows the product as it really is, delivery fee and delivery time written on the product page, and confirmation within two hours of the order. Then split the cancellation rate by product and by ad, so you know which products are refused and which ones are fine. Prepayment then becomes a targeted tool for the products that stay bad after those fixes.

How do I measure whether prepayment is working?

Report prepaid and COD orders as two lines, each with its own delivery rate and cost per delivered order. Averaging a 97% line with a 75% line gives you a number that neither group of buyers actually has, and every decision made from it inherits the error.

• Share of prepaid orders, weekly, per product.
• Delivery rate by payment type, so you can see whether prepaid really delivers near 97% for you.
• Cost per delivered order by payment type, after the gateway fee and the discount.
• Refunds on prepaid orders, which are the prepaid version of a refusal.

Watch the break-even move as well. On one 618-product catalogue, break-even was 1.77 ROAS on paper and 2.11 once cancellations were counted, and campaigns clearing 1.9 were losing money on every delivered order (the case). A growing prepaid share should pull your real break-even back toward the paper figure. If it doesn't, the discount is eating the gain.

If you want those numbers for your own store before deciding, send the store link to the free audit: you get the most you can pay for an order, your ROAS after delivery and your biggest leak within 48 hours.