Following are the problems that arise due to pay by cash delivery service: Extra Cost: Delivery partners usually charge extra for COD transactions. This is because they have to handle the operational costs of the returned products to the seller. Further, the seller has to bear the cost of both forward and reverse logistics. Cash Flow Hindrance: While digital payments are immediately transferred to the merchant, pay with cash on delivery delays the receipt of payments from the customer. This creates a working capital gap for the merchants, which hinders their operating cash flows. Also, refunds further make things complicated. High Returns: COD provides a sense of safety to the customers, so they might not think twice before cancelling the order. The return ratio is large with the COD payment method, and the online business suffers if the customer declines the order.