Cash on delivery (COD) is one of the most common ways customers in Pakistan pay for online orders. Many shoppers prefer it because they can see the parcel before paying. Shopify supports COD as a manual payment method: the customer places the order online and pays the courier in cash when the parcel arrives. This guide covers the setup, managing COD orders, and the most important part, reducing refused deliveries.
In this guide
How cash on delivery works
- Customer ordersThe customer chooses Cash on Delivery at checkout. No payment is taken online.
- You confirm and dispatchYou confirm the order, pack it and book the courier.
- Courier collects cashThe courier delivers the parcel and collects payment from the customer.
- You receive settlementThe courier transfers the collected amount to you, usually after deducting charges.
- You mark the order paidUpdate the order in Shopify so your records are accurate.
How to turn on cash on delivery
- In your Shopify admin, go to Settings › Payments.
- Find the Manual payment methods section.
- Add Cash on Delivery (COD).
- Add instructions customers will see, for example: "Please keep the exact amount ready. Our courier will call before delivery."
- Save your changes and place a test order to see how it appears.
Shopify's menus are updated from time to time, so if the labels look slightly different in your admin, look for manual payment methods in your payment settings.
Managing COD orders in Shopify
COD orders are created with a payment status of Payment pending. When the courier collects the cash and you receive it, mark the order as paid from the order page. Keeping these statuses up to date makes your sales reports accurate and helps you see which orders are still outstanding. Use order tags such as confirmed, dispatched or refused to filter orders quickly.
Reducing refused and returned COD orders
The main cost of COD is orders that customers refuse at the door, because you usually pay shipping both ways and the stock is unavailable while it travels. These steps help:
- Confirm orders before dispatch. A quick call or WhatsApp message to confirm the address, phone number and order catches many fake or impulsive orders.
- Show clear product information. Accurate photos, sizes and materials reduce refusals caused by mismatched expectations.
- Make delivery times clear. Customers who expect delivery in two days and receive it in seven are more likely to refuse.
- Ask for a complete address. Include area, nearby landmark and a working phone number in your checkout.
- Keep internal notes. Tag customers who repeatedly refuse orders so you can confirm their future orders more carefully.
- Offer an alternative. Bank transfer or a supported online payment option gives customers who prefer to pay in advance a choice.
Example confirmation message: "Assalam o Alaikum, thank you for your order #1024 of 2 cotton suits (Rs. X) for delivery to [area], Lahore. Please reply YES to confirm so we can dispatch today."
COD charges
Some stores add a COD fee to cover courier collection charges. If you do, state it clearly on the product page, in the shipping policy, or in the checkout instructions so customers are not surprised. Hidden charges at the door increase refusals and damage trust.
Settlement with couriers
Couriers collect the cash and transfer it to you on a schedule, usually after deducting their charges. Check each settlement report against your COD orders in Shopify. Any order marked delivered but missing from a settlement should be raised with the courier quickly.
Example
A clothing store receives 40 COD orders a week. By sending a WhatsApp confirmation for each order before booking the courier, and cancelling orders that do not respond within a day, the owner avoids paying return shipping on orders that were never likely to be accepted. Tagging confirmed and refused orders in Shopify also shows which cities and products have the highest refusal rates, so the owner can adjust delivery promises and product descriptions.
Frequently asked questions
Does Shopify charge a fee for COD orders?
Shopify's transaction fees apply differently depending on your plan and payment setup. Check the current fee details on Shopify's pricing page and in your billing settings.
Can I offer COD only in some cities?
Manual payment methods are not easily restricted by location with Shopify's default settings. Some stores use apps or checkout customisations for this; check that any app you use is compatible with your plan.
Should I stop offering COD to reduce refusals?
For many stores in Pakistan, removing COD would reduce orders significantly. Confirming orders and improving product information usually works better than removing it.
Planning your store's costs? See How to Plan an E-commerce Website Budget.
