The verdict in three sentences
Cash on delivery (COD) reassures the customer but drives 15-30 % returns and locks cash up to D+14. A 3-5 % discount for MoMo prepayment drops returns to 5-8 % and collects immediately. In Ghana as in Benin, COD is still the majority (40-55 %): the goal isn't to remove it but to reward prepayment.
The real cost of cash on delivery
COD looks free but stacks returns, reverse logistics and tied-up cash.
| Indicator | Cash on delivery | MoMo prepayment |
|---|---|---|
| Return rate | 15-30 % | 5-8 % |
| Collection delay | D+7 to D+14 | Immediate |
| Reverse logistics cost | 2,000-4,000 FCFA | Rare |
| Tied-up cash | High | None |
| Refused-parcel risk | High | Low |
| Market share (Ghana) | 40-55 % | Growing |
The prepayment discount: is it profitable?
A 3-5 % discount costs less than a return. The math turns favourable as soon as the COD return rate exceeds ~10 %.
| Scenario | COD, no discount | Prepaid, 4 % discount |
|---|---|---|
| Average basket | 20,000 FCFA | 20,000 FCFA |
| Discount granted | 0 FCFA | 800 FCFA |
| Weighted return cost | ~750 FCFA (25 % × 3,000) | ~200 FCFA (6.5 % × 3,000) |
| Collection | D+10 | Immediate |
| Relative net margin | Baseline | +550 FCFA + immediate cash |
Mini case study
Fatou sells accessories online in Accra: 500 orders/month, average basket 20,000 FCFA (about 30 EUR), COD return rate 25 %. Each return costs her 3,000 FCFA in reverse logistics, i.e. 375,000 FCFA/month. Offering a 4 % discount on MoMo prepayment, 60 % of customers switch: returns fall to ~10 % overall. She saves about 225,000 FCFA/month in logistics and collects 6,000,000 FCFA immediately instead of D+10, for a discount cost of 240,000 FCFA.
FAQ
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Why is COD so expensive?
Because it stacks a 15-30 % return rate, 2,000-4,000 FCFA of reverse logistics per parcel, and cash tied up to D+14. Prepayment removes most of these costs.
Does a prepayment discount break margins?
No, if the COD return rate exceeds ~10 %. A 3-5 % discount costs less than an average return and collects cash immediately.
Should I remove COD entirely?
No: in Ghana it's still 40-55 % of orders. Keep it as an option but make prepayment more attractive with a discount and priority delivery.
How do I convince a wary customer to prepay?
Show the discount, a WhatsApp support number and a clear 48 h refund policy. Trust is built with a visible returns process, not just a promise.
What cash-flow gain can I expect?
On 500 orders at 20,000 FCFA with 60 % switching, you collect ~6,000,000 FCFA immediately instead of waiting to D+10, funding your restocks without an overdraft.
Let's talk about your project. We configure your MoMo prepayment incentives to cut 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.
