Alternative for COD – ROD “Release On Delivery”

PayUPaisa has launched a new payment option called (ROD) Release on Delivery. This new option aims to fix the broken e-commerce payment model and garner trust among buyers. PayUPaisa built this feature because their internal research showed that 35% of online customers do not trust sellers and always select Cash On Delivery as a payment option even though they do have the ability to pay online using their cards or netbanking.

While Cash on Delivery is good for buyers, it can be problematic for e-commerce companies and can increase the workload and reduce margins for sellers. High transaction costs and third party couriers charging cash handling fees can eat into the margins that sellers make while selling online. In order to solve this, PayUPaisa’s Release on Delivery is going to hold the customers money till the order is delivered. Once the customer confirms that they have received an order, the money automatically gets transferred into the merchant’s account. The money is temporarily held in an escrow like service.

How does it work?

When a user buys a product on a website which has PayUPaisa enabled, they are greeted with different payment options. When a customer selects COD as the payment method, the Release on Delivery (ROD) option is also shown to them. Once the customer is satisfied with what the service offers, they can pay online with their cards or netbanking accounts. Once the package is delivered, the buyer has to confirm that they have received the product and PayUPaisa will release the funds to the customer.

Even if a buyer fails to confirm for 3 days after product delivery, then the money is automatically released to the merchant. The company has also set up a dispute resolution process which is supposed to faster than the COD dispute resolution process. With this buyers can get refunds on legitimate claims in just about 2 days as compared to the 7-15 days time period for COD resolutions.

This seems to be a good service as it adds protection to the buyers but also makes it easy for merchants to convert those who choose COD because of trust issues to try out online payments in a safe way. If the experience has been good for the customer, they will no doubt choose the online payment option again while shopping. This will reduce costs and extra processes for the merchants.

Tradus seems to have already integrated this new feature into their website but it is still not active for some reason. Since COD is generally a headache for e-commerce companies, I think more online marketplaces will offer this new mode of payment soon.

What are your thoughts on (ROD) Release on Delivery? Do you think that this is a good solution for e-commerce payments?