Cash on Delivery vs Prepaid: Pros and Cons in Italy

TL;DR: In Italy, cash paid on delivery accounts for 1.6% of online purchases on average (NetRetail 2026 survey by Netcomm, the Italian ecommerce consortium), but in stores that offer cash on delivery (COD) its share is much higher: almost one order in five, according to 2022 data from a shipping software provider. COD removes a purchase barrier, but it brings refusals and costs you need to measure on your own orders. Prepaid payment has better margins but excludes customers who only want to pay on delivery. The optimal 2026 strategy is hybrid: offer both with differentiated management, encouraging prepaid without touching the price and protecting COD with checks on risky orders and phone confirmation.

The choice between cash on delivery and prepaid is not a matter of principle. It is an economic decision that directly impacts conversions, margins, cash flow, and growth. And in the Italian market, where COD is a small share of online purchases overall but remains important for many stores, especially in the South, the answer is never "only one or the other."

This guide compares the two approaches across every dimension relevant to a merchant: costs, conversions, refusals, margins, logistics, and scalability. The goal is to give you the tools to decide the right strategy for your specific business.

The Italian ecommerce payments landscape in 2026

Before comparing COD and prepaid, context is essential, and so is knowing what the figures in circulation actually measure.

According to Netcomm's NetRetail 2026 survey, this is how Italian online shoppers pay:

Overall, 94% of online purchases are paid at the time of order and 6% on delivery, at pickup, or when the service is used. The press release does not list the other methods, does not say where PayPal falls, and counts all online purchases, services included.

The average, however, also includes stores and services that do not offer cash on delivery at all. Where it is offered, its share is much higher. According to 2022 data from a shipping software provider, almost one order in five was paid on delivery in the stores that offered it, from 4.6% in electronics to 31.7% in fashion. In Calabria and Sicily, in the South, it was chosen for more than one order in three; in Veneto, in the northeast, for 13% of orders. These are the provider's data on its own customers, and they are a few years old: the figure that matters is your own store's.

These numbers say two things. Across all online purchases COD is a small share, but for a store selling to customers who use it, for example in the South or in fashion, it can account for a significant share of orders. And offering it without management generates costs that can completely erode margins.

Cash on delivery: pros and cons

COD advantages

Higher conversions. The most immediate effect. Adding COD at checkout removes a purchase barrier: the customer does not need to enter payment data, does not need to trust an unknown site, does not need to assume any risk. Trust matters: in a Baymard Institute survey of US online shoppers, 19% of those who had abandoned a cart (excluding those who were just browsing) did not trust the site with their credit card information. To see how much conversions grow in your store, compare orders with the option switched on and off.

Full market access. Some customers only want to pay once the parcel is in their hands, and in stores that offer COD, as shown above, they are not a small group, especially in the South. Excluding them means giving up those orders.

Low-risk customer acquisition. For the customer, COD eliminates risk: "I don't pay until I see the product." This is particularly powerful for unknown brands, new products, and social ad purchases where trust is low.

COD-to-prepaid conversion. A customer whose first COD order went well can switch to prepaid for the next ones, if you suggest it the right way (more on this below). COD then works as an acquisition channel that pays for itself over time, and how many customers actually switch is something you measure on your own orders.

COD disadvantages

Refusals at delivery. Some COD orders are refused at the door or never collected, and each refusal costs the outbound shipment, the return shipment, any fees while the parcel is held at the carrier's depot, and re-processing in the warehouse. We have not found a publicly measured figure for COD refusals in Italy: the figures in circulation come from vendor blogs that cite no source. You calculate your own rate by dividing the COD orders refused or returned to sender by those shipped.

Delayed cash flow. The carrier collects at delivery but remits the money to the merchant a few days later, under the terms of your contract. Meanwhile that money is "in transit": for example, with 200 COD orders a day at €50 on average, every day of waiting ties up €10,000.

Direct costs. The COD collection fee the carrier charges on each shipment is a fixed cost that does not exist for prepaid.

Fraud and abuse. COD is vulnerable to fraudulent orders, product testing, and impulse purchases with regret. Without prevention systems, these phenomena erode margins significantly.

Prepaid payment: pros and cons

Prepaid advantages

Higher margins. No COD fee, no refusal costs, no return shipping for non-payment. That is why, for the same order value, a prepaid order usually leaves a higher net margin than a COD order.

Immediate cash flow. Payment happens at order time. The merchant has immediate liquidity to cover product and shipping costs.

Customer commitment. A customer who has paid is psychologically committed: payment creates a sunk cost that reduces second-guessing, and there is no refusal at the door for non-payment. Returns still happen, as with any online order.

Operational simplicity. No pre-shipping verification needed, no remittance cycle to manage, no COD payment reconciliation.

Prepaid disadvantages

Lower conversions. Mandatory payment at checkout adds one more barrier at a step where many shoppers already drop off. According to an average of 50 studies compiled by the Baymard Institute, 70.22% of online carts, about 7 in 10, never become an order, for a range of reasons. It is an international average, not an Italian figure, and it does not separate stores with and without cash on delivery. To see how much COD matters in your own store, compare conversions with the option switched on and off.

Demographic exclusion. Customers who only want to pay on delivery, more often in the South according to the data above, may give up the purchase without a COD option.

Chargebacks and card fraud. Prepaid is not immune to fraud. Each chargeback (a disputed card payment) has a cost, and if disputes become too frequent relative to orders, the payment processor can apply penalties.

Barrier for unknown brands. A brand with no reputation asking for upfront payment on a €60 order loses a significant percentage of customers who do not trust enough.

Head-to-head comparison: item by item

Here is how they compare, item by item. The real values depend on your contracts and your customers, and you measure them on your own orders:

The key point: prepaid has better margins per order, but COD can bring orders that would not otherwise exist. The right question is not "which margin per order" but "which total margin across the business."

Analysis by scenario

The numbers in these scenarios are examples to show the calculation, not market averages: replace them with yours.

Scenario 1: Italian D2C brand with mixed customer base

Situation: you sell cosmetics online, 30% of traffic comes from the South, AOV €45, 1,000 orders a month, all prepaid, with an average margin of €12.

Example assumptions: switching on COD brings 300 extra orders a month, paid on delivery, and customers who used to prepay keep doing so. On a delivered COD order the margin drops to €10 because of the COD fee, and each refused parcel costs €15 for the outbound and return trips.

The calculation: if one COD parcel in ten is refused, the 270 delivered orders bring in €2,700 and the 30 refusals cost €450, so COD adds €2,250 of margin a month. If one in three is refused, the 200 delivered orders bring in €2,000 and the 100 refusals cost €1,500, leaving €500. With these assumptions COD stops paying off when more than two parcels in five come back.

Scenario 2: Foreign brand entering Italy

Situation: French skincare brand, no brand awareness in Italy, AOV €55.

Prepaid only: low conversions, because the brand is unknown and the customer has to pay before seeing the product.

COD + prepaid: COD functions as a trust bridge. In the first months, you measure how many extra orders it brings and how many customers then switch to prepaid, using the metrics in the FAQ below.

For an unknown brand in Italy, COD is not optional, it is the tool that opens the market.

Scenario 3: Brand with very low margins

Situation: electronic gadgets, AOV €25, margin €4 per order.

With such thin margins, a single COD refusal, which costs at least the outbound and return shipments, can wipe out the margin on several delivered orders. In this case:

Strategy: offer COD only with mandatory phone verification and micro-deposit. Accept COD only for orders above €20. Encourage prepaid with the convenience of online payment, without discounts tied to the payment method.

The hybrid strategy: the best of both

The answer is not choosing between COD and prepaid. It is offering both with a differentiated strategy.

Encourage prepaid without touching the price

• Convenient payment, with saved cards, wallets, and one-click checkout
• Free shipping above a threshold, the same for every payment method
• Reassurance messages: satisfaction guarantee, security badges, reviews
• BNPL (Buy Now Pay Later): offer installments as an alternative to COD for those who do not want to pay everything upfront but accept digital payment

Protect COD

• Same price for every payment method, with no surcharge for cash on delivery, because Article 62 of the Italian Consumer Code (Codice del consumo) bans it and, for the Italian Competition Authority (AGCM), the ban also covers cash on delivery
• Checks on risky orders before shipping, for example of the address
• Phone confirmation for medium-to-high-risk orders
• Fast, predictable delivery to reduce second thoughts
• Pre-delivery notifications via SMS/WhatsApp

Convert COD customers to prepaid

• After a successful COD purchase, send a coupon for the next order, valid with any payment method
• In post-purchase communication, highlight the practical benefits of prepaid (faster shipping, no cash to prepare)
• After 2-3 successful COD orders, actively propose switching to a saved card

You measure how many COD customers switch to prepaid with this strategy by looking at their first orders (see the FAQ).

When prepaid-only makes sense

There are scenarios where COD does not add value:

• Digital products or services: no physical delivery, no point in COD
• Non-Italian markets: the share of COD varies from country to country, so check it market by market before you offer it
• Very low AOV (<€15): the COD fee + refusal risk makes the order unprofitable
• Perishable products: a refused food package means total product loss
• Already loyal customers (repeat purchases only): loyal customers willingly pay in advance

When COD is non-negotiable

• Selling in Italy with a target that includes the South and Islands
• Unknown brand needing to build trust
• Social ad traffic (Instagram, TikTok) with high impulse purchase rates
• High-distrust categories (supplements, cosmetics, "as seen on TV" products)
• New market entry where you have no reputation

How Tissquad can help

Tissquad prepares and ships both prepaid and cash-on-delivery orders from the same warehouse, in Campania, near Naples. In Italy we ship with GLS, BRT, Poste Italiane, and Amazon Shipping, and abroad with GLS, FedEx, DHL, and UPS, choosing the carrier based on weight, zone, and cost. Cash-on-delivery orders go out with carriers such as GLS and Poste Italiane, and before shipping them we check the address and, on request, confirm them by phone, in Italian. We usually pay out cash-on-delivery collections every week, with a summary of what was collected. A refused package costs outbound and return shipping, which is why the checks happen before shipping.

Want to work out which mix of cash on delivery and prepaid makes sense for your store? Request a call with our team, the first one is free.

Frequently asked questions

Does COD reduce average order value?

Not necessarily. According to 2022 data from a shipping software provider, in stores that offered cash on delivery, orders paid on delivery had an average value about €21 higher, with large differences between sectors. The data are a few years old and cover the provider's customers: the comparison that matters is the one on your own orders, between the AOV of COD orders and that of prepaid orders.

Can I offer COD only for the first order?

Technically yes, and some brands use this as an acquisition strategy. After a successful first order, they offer only prepaid for subsequent purchases. The risk is losing customers who prefer to continue with COD. The better approach is proposing the switch to prepaid without making it mandatory.

Is Buy Now Pay Later (BNPL) replacing COD?

Partially. BNPL (Klarna, Scalapay, etc.) captures a segment of customers who do not want to pay everything upfront but accept digital payment, and it is growing: in the NetRetail 2026 survey, installments account for 2.5% of online purchases, twice as much as in 2022, against 1.6% for cash paid on delivery. The COD customer, however, is after something else and wants to pay only with the product in hand. And in the 2022 data above, such customers are more common in the South.

Which payment method has the highest net margin?

It depends on your rates, so run the numbers on those. A bank transfer usually carries no fee for the payee, but few people use it for online purchases. Cards, PayPal, and digital wallets charge a fee on the amount, often plus a fixed amount per transaction, and BNPL charges the store a fee that you should compare with the others. Managed COD costs the carrier fee, verification, and residual refusals, but brings orders that would not otherwise exist.

How do I measure the impact of COD on my business?

Three key metrics: (1) Conversion uplift: how much orders increase with COD active vs. disabled; (2) Net COD cost: (refusal costs + COD fee + verification) minus (margin from additional orders generated by COD); (3) COD-to-prepaid conversion rate: how many COD customers switch to prepaid within 3 orders. If the net cost is negative (meaning COD generates more margin than it costs), cash on delivery is an investment, not an expense.

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COD and prepaid are not alternatives. They are two levers of the same business. Tissquad prepares and ships both types of order from the same warehouse. Find out how.

Related articles: Cash on Delivery in Italy: A Guide for Merchants | COD Fraud Prevention | COD Management and Processing

Sources

7

• Consorzio Netcomm, NetRetail 2026 press release (in Italian), 2026
• Qapla', Quali sistemi di pagamento scegliere per il proprio eCommerce (in Italian), 2023
• Baymard Institute, Cart Abandonment Rate Statistics, 2025
• Normattiva, Italian Consumer Code, Article 62 (in Italian), 2014
• AGCM, press release on payment surcharges (in Italian), 2016
• AGCM, Bulletin no. 42, decision PS12934 (in Italian), 2025
• Normattiva, Legislative Decree 11/2010, Article 3 (in Italian), 2018