The verdict in three sentences
Cash on delivery (COD) reassures and converts wary customers, but it costs you: 15 to 25 % doorstep refusals, doubled logistics fees and cash tied up 7 to 15 days. Mobile money collects upfront, secures 100 % of revenue for ~1.5 % fees and clears your queue of phantom orders. The right 2026 strategy is not one OR the other, but steering the mix by customer profile and basket size.
The real cost of cash on delivery
COD looks free: the customer pays on receipt. But every refused order has already cost you picking, packing and the courier's trip. In West Africa, about 30 % of e-commerce orders are COD, with a cancellation rate around 20 %.
| Criterion | Cash on delivery (COD) | Mobile money (prepaid) |
|---|---|---|
| Doorstep refusal rate | 15 to 25 % | ~0 % (already paid) |
| Fee per order | +GHS 30 logistics | ~1.5 % of basket |
| Cash tied up | 7 to 15 days | immediate (D+1) |
| Unpaid risk | high | near zero |
| Reassurance for wary buyers | very strong | medium |
| Cost of a refused order | picking + trip lost | none |
| Accounting reconciliation | manual, heavy | automatic |
On an average basket of GHS 300, mobile money costs about GHS 4.50 (1.5 %). A refused COD order costs at least GHS 30 in bare logistics, not counting the tied-up product. COD is only "free" on the orders that complete.
How to decide by basket and customer
The winning move: don't kill COD (it converts new customers), but reserve it for cases where it earns more than it costs. Here is a numbers-based decision grid.
| Situation | Recommendation | Why |
|---|---|---|
| New customer, small basket (< GHS 200) | COD accepted | Reassures, limited refusal cost |
| High basket (> GHS 700) | Mobile money only | Unpaid risk too costly |
| Loyal customer (3+ orders) | Nudge mobile money (2 % off) | Retains and secures |
| Distant delivery zone | Prepaid mobile money | Lost trip unacceptable |
| Fragile / made-to-order product | 50 % mobile money deposit | Covers production |
A 2 % discount on prepaid mobile money costs less than COD's 20 % cancellations: it's the most profitable lever to gradually shift your customers to secured collection.
Mini case study
Ama runs a ready-to-wear store in Accra, 100 orders/month, average basket GHS 350. At 100 % COD she suffers 20 % cancellations, i.e. 20 refused orders at GHS 30 logistics = GHS 600/month lost, plus cash tied up 10 days.
She shifts 60 % of orders to mobile money with a 2 % discount. On those 60 prepaid orders: fees 1.5 % = GHS 315, discount 2 % = GHS 420, but zero cancellations. The remaining 40 COD orders generate GHS 240 of losses (instead of GHS 600). Net: she moves from GHS 600 of losses to GHS 975 of controlled costs but collects GHS 21,000 upfront and frees her cash — decisive for restocking.
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FAQ
Should I remove cash on delivery entirely?
No. COD remains a great conversion tool for wary new customers, who dominate the market. Reserve it for small baskets and nearby zones, and nudge mobile money above GHS 700.
What does a cancelled COD order really cost?
At least GHS 30 in bare logistics (picking, packing, courier trip), not counting the tied-up product and processing time. At 20 % cancellations the bill adds up fast.
Does mobile money really cut cancellations?
Yes, drastically. An order already paid via MoMo or M-Pesa is almost never refused at the door. You move from a 20 % cancellation rate to near zero.
How do I nudge customers to prepay?
A 2 % discount on mobile money usually does it: it costs far less than COD's 20 % cancellations, and the customer sees a concrete immediate benefit.
Does COD really tie up my cash?
Yes. Between shipping, delivery and cash coming back up the chain, count 7 to 15 days before you collect. Mobile money credits your account from D+1, which changes everything for restocking.
Let's talk about your project. We set up an optimal COD / mobile money mix for your average basket and delivery zones. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
