UPI is rising, but cash on delivery still drives India’s e-commerce beyond metros

Cash on delivery remains about 60% of Indian e-commerce orders and can reach 75% in smaller cities, even as UPI expands. Brands are using AI risk scoring, address checks, partial CoD and prepaid incentives to curb the 20–30% return-to-origin burden.

— Source publishedMon, 27 Jul, 2026, 05:42 IST·First seen Mon, 27 Jul, 2026, 05:54 IST·Source Financial Express · BrandWagon

What happened

Indian e-commerce sector · Cash on delivery remains dominant in Indian e-commerce, particularly beyond metros, despite UPI adoption. Brands including Miraggio

Key facts

  • CoD accounts for around 60% of e-commerce orders
  • CoD reaches 75% in Tier-II and smaller markets
  • CoD is less than 5% of quick-commerce orders
  • Miraggio: CoD is 44% of orders and 42% of revenue
  • Sirona Hygiene: CoD is more than 20% of shipped orders
  • Meesho: CoD estimated at 72-75%
  • Amazon: CoD estimated at 35-40%
  • Fashion e-commerce: CoD estimated at 20-50%
  • CoD RTO rates typically range from 20-30%
  • AI interventions reduced RTO rates by 5-7%
  • Sirona cut CoD share from over 50% to about 20%

Why this matters

Prioritise partnerships or acquisitions in fraud scoring, address intelligence, logistics orchestration and prepaid-conversion tools that help merchants optimise—not eliminate—CoD.

What to watch

  • UPI’s share of e-commerce checkout value versus its share of completed orders, especially outside the top metros.
  • RTO rate changes after OTP, partial-CoD and prepaid-incentive experiments; monitor conversion loss alongside RTO reduction.
  • Carrier-level first-attempt delivery success, fake-address incidence and delivery refusal rates by pin code.
  • Whether marketplaces introduce broader CoD fees, customer-side deposits or seller penalties for avoidable RTO.
  • Growth in repeat-purchase prepaid adoption after a customer’s first successful CoD delivery.
  • Category-specific CoD restrictions in fashion, beauty, electronics, bulky goods and low-ticket impulse products.
  • Regulatory or platform changes affecting UPI autopay, refund speed, digital identity verification or cash-handling costs.
  • Build a pin-code, customer-cohort and SKU-level CoD profitability model that includes RTO freight, reverse logistics, inventory ageing, support costs and lost conversion from payment restrictions.
  • Deploy graduated payment rules: unrestricted CoD for trusted cohorts, OTP confirmation for medium-risk orders, and partial advance payment or prepaid incentives for high-risk combinations.
  • Make prepaid benefits concrete: guaranteed faster dispatch, instant UPI discount, priority support, frictionless refunds and loyalty rewards rather than generic couponing.
  • Use address intelligence before fulfillment, including geocoding, landmark validation, prior delivery success, duplicate identity checks and local carrier serviceability scores.
  • Route high-RTO CoD orders to the carrier or local delivery partner with the strongest attempt-success rate, not simply the lowest forward-shipping rate.
  • Create win-back journeys after successful CoD deliveries to convert verified customers to UPI on their second and third orders.
  • Adjust inventory allocation so high-CoD, high-RTO pin codes are served from closer fulfillment nodes where reverse-logistics exposure is lower.

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