The verdict in three sentences
Cash on delivery (COD) reassures and converts new customers better, but it costs you 6-12% in returns/cancellations and ties up your cash for days. Mobile money prepay (MTN MoMo, Telecel Cash) removes those losses and secures collection, at the price of weaker conversion on first purchases. The right 2026 strategy is not binary: COD to acquire, prepay incentivised by a discount to retain and protect margin.
COD vs prepay: the numbers
2026 order of magnitude for a general store in Ghana, average order GH₵300.
| Criterion | Cash on delivery | Mobile money prepay |
|---|---|---|
| Checkout conversion rate | 62% | 48% |
| Return / cancellation rate | 6-12% | 1-2% |
| Collection fees | ~0% (but re-delivery) | 1-1.5% (MoMo) |
| Cash tied up | T+2 to T+7 | Immediate |
| Fraud / fake-order risk | High | Low |
| Re-delivery cost per failure | GH₵25 | 0 |
COD wins on raw conversion, but after returns and re-deliveries its net collected conversion approaches prepay — sometimes lower on expensive products.
The cash-flow and fraud effect
The real cost of COD is invisible in the conversion rate. Across 100 orders at GH₵300:
| Line | COD | Prepay |
|---|---|---|
| Orders placed | 62 | 48 |
| Returns (10% / 2%) | −6 | −1 |
| Orders collected | 56 | 47 |
| Net revenue | GH₵16,800 | GH₵14,100 |
| Re-delivery cost | GH₵1,350 | 0 |
| Mobile money fees | 0 | GH₵211 |
| Relative net margin | GH₵15,450 | GH₵13,889 |
COD often still wins on raw volume, but the gap shrinks fast and prepay wins on cash predictability — decisive when you restock weekly.
Mini case study
Ama sells phone accessories in Accra. She is 100% COD, 400 orders/month, average GH₵225, 11% returns. Re-deliveries cost her 44 failures × GH₵25 = GH₵1,100/month, and 44 parcels come back unsold.
She introduces a 5% discount for MoMo prepay. 40% of customers switch. On those 160 prepaid orders, returns fall to 2%, she saves ~GH₵400 in re-deliveries and recovers her cash immediately. The discount costs 160 × GH₵225 × 5% = GH₵1,800, offset by higher prepaid basket size and fewer unsold returns. Above all, she stabilises her working capital.
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FAQ
Does COD really convert better?
Yes for new customers: +10 to +18 checkout points because it removes the fear of paying upfront. But after 6-12% returns, the net collected advantage shrinks to a few points, or reverses on expensive products.
How do I push prepay without losing sales?
Offer 5% off or free delivery for MoMo prepay. This switches 30-45% of customers and cuts returns from 10% to 2%, while freeing your cash immediately.
What are mobile money fees in 2026?
Expect 1-1.5% on the merchant side for MTN MoMo and Telecel Cash on web collection. On a GH₵300 order that is GH₵3-4.50 — far below the GH₵25 of a COD re-delivery.
How do I limit COD fraud?
Confirm each order by WhatsApp, block numbers that previously refused a parcel, and require a MoMo deposit on baskets above GH₵800. These rules typically halve fake orders.
Should I drop COD entirely?
No: it remains the best channel to acquire new customers. Keep it for the first purchase, then push prepay on repeat orders via discounts and loyalty to protect margin.
Let's talk about your project. We set up a hybrid COD + mobile money checkout with prepay incentives. 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.
