The verdict in three sentences
Cash on delivery (COD) reassures the customer but erodes your margin: in 2026, the COD return rate reaches 15 to 25 % versus 3 to 5 % for mobile money prepay. Every refused parcel costs you the delivery run, ties up stock and blocks cash. With a 5 % incentive for Wave/OM prepayment, you shift a large share of buyers to a far more profitable model.
COD vs prepay: the real cost
COD looks free since the customer pays on receipt. In reality it concentrates hidden costs: returns, lost runs, tied-up cash, phantom-order fraud. Mobile money prepay removes most of these costs.
| Criterion | Cash on delivery | Mobile money prepay |
|---|---|---|
| Return / refusal rate | 15 to 25 % | 3 to 5 % |
| Lost run per refusal | 1,500 to 3,000 FCFA | near zero |
| Collection delay | 3 to 10 days | immediate |
| Tied-up cash | high | low |
| Fraud / phantom-order risk | high | low |
| Transaction fees | 0 % | 1 to 2 % |
The 1 to 2 % mobile money fees are negligible against COD's 15 to 25 % returns. Prepay is almost always more profitable as soon as the COD return rate exceeds 8 to 10 %.
The quantified impact on margin
Take a store at 500 orders per month, average basket 20,000 FCFA, delivery run 2,000 FCFA. Here is the effect of the payment mode on net margin.
| Scenario | Returns | Lost runs | Monthly return cost |
|---|---|---|---|
| 100 % COD (20 % returns) | 100 orders | 100 runs | 200,000 FCFA + lost margin |
| 50 % COD / 50 % prepay | ~62 orders | ~62 runs | 124,000 FCFA |
| 100 % prepay (4 % returns) | 20 orders | ~20 runs | 40,000 FCFA |
Moving from 100 % COD to mostly prepay saves this store over 150,000 FCFA per month in lost runs alone, not counting freed-up cash and margin saved on non-returned products.
How to shift your customers to prepay
You don't remove COD overnight: you make it less attractive than prepay. A 5 % incentive, faster delivery on prepay and strong reassurance are enough to move 40 to 60 % of buyers. Keep COD as an option so you don't lose the most cautious ones.
Mini case study
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Moussa sells home goods in Dakar, 500 orders per month, 100 % COD, 20 % return rate. He loses 100 runs at 2,000 FCFA, i.e. 200,000 FCFA per month, plus margin on 100 products returning damaged. By offering 5 % off on Wave/OM prepay, 55 % of his customers switch. His overall return rate drops to 11 %, lost runs to 55, i.e. 110,000 FCFA. He saves 90,000 FCFA per month, even after granting the 5 % discount on prepaid orders.
FAQ
Is COD really that costly?
Yes, as soon as the return rate exceeds 8 to 10 %. At 20 % returns, each refusal stacks a lost run, an idle product and blocked cash, which weighs heavily on an already thin margin.
Should you remove COD entirely?
Not at first. Better to keep it as a secondary option and make prepay more attractive. Some customers wouldn't order at all without COD.
Is a 5 % discount enough to convince?
In most cases, yes, especially paired with faster delivery on prepay. You typically see 40 to 60 % shifting to mobile money with this incentive.
Does prepay really reduce fraud?
Yes. Paying upfront eliminates phantom orders and delivery refusals, which make up a large share of COD losses.
How long to see the cash-flow effect?
Immediately: prepay collects at order time, versus 3 to 10 days for COD. Available cash improves from the first month.
Let's talk about your project. We configure your Wave/OM prepay incentives and cut your COD returns. 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.
