Cash on Delivery (COD) remains the most widely used payment method in Pakistan’s e-commerce sector. Even in 2025, COD accounts for 75% of all online transactions, according to PCMI. Many customers prefer to pay only after receiving and checking their parcel, which makes COD a core part of doing business for online sellers across the country.

This blog covers exactly how COD works in Pakistan, its advantages and drawbacks for both buyers and sellers, and how PostEx addresses the common pain points that merchants face with traditional COD couriers.

How COD Works Step by Step

Customers place an order on an e-commerce store or social media page and select Cash on Delivery as the payment method.
Merchant accepts the order, packs the product, and hands it over to the courier partner along with an invoice that shows the exact amount to be collected.
Courier picks up the parcel from the merchant’s location and moves it through sorting facilities to the destination city.
Delivery rider attempts delivery at the customer’s address. If the customer is available and satisfied with the product, they pay the full amount in cash (or sometimes via mobile wallet) and receive the parcel.
If the customer refuses or is unavailable after multiple attempts, the parcel is returned to the merchant (Return to Origin – RTO).
Collected cash is deposited by the courier company into its own accounts, then remitted to the merchant after deducting service fees. This remittance cycle is where most differences between courier companies appear.

Benefits of Cash on Delivery in Pakistan

For Customers

Zero risk of online fraud, you pay only when you hold the product.
No need for a credit/debit card or bank account.
Option to inspect items (such as clothing, shoes, electronics) before payment, if the brand specifies it on the delivery parcel via PostEx service.

For Merchants

Much higher conversion rates, many shoppers abandon carts if COD is not offered.
Access to customers in tier-2, tier-3 cities and rural areas where digital payments are still limited.
COD orders often show higher average order values in many categories because customers are not limited by immediate digital payment methods and feel more comfortable purchasing higher-priced items when payment is made at delivery.

One Dashboard for All Couriers

Aramex, SMSA, DHL, Zajil — manage every shipment on one screen.

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The Hidden Costs of COD for Pakistani Merchants

Despite its popularity, COD creates significant operational and financial challenges, especially for merchants.

1. High Return-to-Seller Rates

The average return-to-seller rate in Pakistan is around 27%. Fake orders, change of mind, and customers not being available all contribute to high returns. Every returned parcel costs the merchant two-way shipping charges plus additional handling time.

2. Slow Remittance Cycles

Most conventional courier companies remit COD collections once a week, while many traditional players clear payments around the 15th day. This still leaves merchants with lakhs, sometimes crores, tied up, creating serious cash-flow challenges for growing businesses.

3. Cash Mishandling and Fraud Risks

Short payments, lost cash reports, and delayed deposits have been recurring complaints with several legacy courier providers.

4. High Service Quality Issues

Late deliveries, poor tracking updates, and limited coverage in smaller cities lead to more cancellations and negative reviews.

5. High Fees on Returns and Failed Deliveries

Many couriers charge full forward + return freight even when the customer refuses the parcel.

How PostEx Makes COD Work Better for Merchants

We deliver over 80 million parcels in 2025 alone (till date), operate in 650+ cities with 250+ warehouses and a field force of 9,000+ riders backed by 2,000+ team members. Today, 7 out of every 10 COD parcels shipped nationwide move through the PostEx network, giving us the country’s leading market share in e-commerce COD.

This scale translates into real advantages that directly fix the biggest COD problems merchants face:

Upfront Payment Transferred Instantly

PostEx pays 50% upfront the day after pickup, and the remaining amount is settled upon successful delivery. No more 15 days wait, your cash reaches you faster, helping you reinvest in inventory and marketing without relying on expensive loans.

650+ Cities Coverage, Including Remote Areas

From Karachi to Khuzdar, Lahore to Loralai, we deliver where most couriers don’t, so you can sell nationwide without “out-of-zone” rejections.

Industry Returns Rates

Our delivery success rate is consistently above 90%, achieved through:

Real-time tracking shared with customers via SMS/WhatsApp
Multiple delivery attempts and flexible timing options
Rider training and performance incentives tied to successful collections

Fair & Transparent Pricing

No hidden charges on returns; we only charge one-way freight if the parcel is returned due to customer refusal.
Competitive COD fees that decrease with volume.

Seamless Technology Integration

Free API and plugins for Shopify, WooCommerce, Magento, and custom websites.
Merchant dashboard with order tracking, reconciliation, and payout reports.
Automated SMS/WhatsApp notifications to customers to reduce failed attempts.

Additional Merchant Friendly Features

Free pickup from your warehouse or store.
We provide support from Monday to Saturday during regular working hours.

Real Results Merchants See with PostEx

Merchants who switch to PostEx typically report:

Improved cash flow and working capital through upfront payments.
Reduction of overall return rates by 3–5% within the first two months.
Higher customer satisfaction due to more reliable delivery timelines.

Whether you are a small Instagram/Tiktok seller processing 10 orders a day or a large e-commerce brand shipping thousands of parcels, PostEx’s COD service is built to scale with your business.

Ready to stop waiting weeks for your COD money and reduce returns?

PostEx Pakistan’s fastest-growing COD partner.

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