# Prepaid Discount vs COD Fee vs Confirmation Call: What Lowers RTO? > Three common ways Indian D2C stores fight COD returns, compared on what each one costs, who it affects and when it pays off, with an illustrative per-100-orders example. Source: https://edesy.in/blog/prepaid-discount-vs-cod-fee-vs-confirmation-2026 **A prepaid discount, a COD fee and a confirmation call all aim at the same problem, RTO on cash-on-delivery orders, but they work at different points and cost money in different ways.** A discount and a fee act at checkout and change how many orders are COD. A confirmation call acts after the order and filters out COD orders the customer no longer wants. The right mix depends on your RTO cost per order and how sensitive your buyers are to checkout changes. > **Compare them with your numbers:** the [prepaid discount vs COD calculator](https://edesy.in/tools/prepaid-discount-vs-cod-calculator) > shows which option saves more per 100 orders for your order value, COD share and RTO cost. ## First, know your RTO cost per order Every comparison below needs one number: how much RTO costs you per COD order, on average. If you don't have it, work it out with [how to calculate your real RTO cost per COD order](https://edesy.in/blog/rto-cost-per-cod-order-calculation-2026) or the [COD and RTO calculator](https://edesy.in/tools/cod-rto-calculator). ## The three methods ### 1. Prepaid discount Offer a small discount or a free gift for paying online at checkout. - **How it lowers RTO:** prepaid orders rarely come back, so every customer who switches removes COD risk. - **What it costs:** the discount on every order that switches, including customers who would have happily paid cash on delivery. - **Who it affects:** everyone at checkout, including your best repeat customers. - **Risk:** low conversion risk; margin cost can be large if the discount is generous. ### 2. COD fee Charge a small extra amount for choosing cash on delivery. - **How it lowers RTO:** discourages casual COD orders and pushes some customers to prepaid. - **What it costs:** nothing directly; it earns a fee on each COD order. The cost is in lost conversions from customers who abandon instead. - **Who it affects:** every COD buyer, including honest ones in areas where prepaid is less common. - **Risk:** higher conversion risk, especially in categories where COD is expected. ### 3. Confirmation call Call each COD order before dispatch; the customer presses 1 to confirm or 2 to cancel. - **How it lowers RTO:** catches orders the customer no longer wants, placed by mistake or duplicated, before you pay to ship them. - **What it costs:** a call per COD order (plus retries for those who don't answer). - **Who it affects:** only COD buyers, after they have ordered; checkout is unchanged. - **Risk:** no conversion risk at checkout. It doesn't stop a customer who confirms and then refuses at the door. ## Side by side | | Prepaid discount | COD fee | Confirmation call | |---|---|---|---| | Acts at | Checkout | Checkout | After the order, before dispatch | | Changes checkout | Yes | Yes | No | | Cost falls on | Your margin (switchers) | Customer (fee) or lost sales | Per COD order called | | Conversion risk | Low | Medium to high | None at checkout | | Catches unwanted orders already placed | No | No | Yes | | Works for buyers who won't pay online | No | No (they pay or leave) | Yes | ## Worked example: per 100 orders (illustrative) The numbers below are assumed round figures to show the method. They are not benchmarks; use the calculator with your own data. **Assumptions:** average order value ₹1,000, 60 of 100 orders are COD, 12 of those 60 come back as RTO, and one RTO costs ₹200. So RTO costs ₹2,400 per 100 orders today. **Prepaid discount of ₹50.** Assume it moves 10 COD orders to prepaid, and 2 of those 10 would have been RTO. - Discount paid: 10 × ₹50 = ₹500 - RTO avoided: 2 × ₹200 = ₹400 - Net: **₹100 worse off** under these assumptions, because most switchers were good orders anyway. **COD fee of ₹30.** Assume it moves 6 COD orders to prepaid, 2 customers abandon (each worth ₹200 of margin), and 1 RTO is avoided. 52 COD orders remain and pay the fee. - Fees collected: 52 × ₹30 = ₹1,560 - RTO avoided: 1 × ₹200 = ₹200 - Lost margin: 2 × ₹200 = ₹400 - Net: **₹1,360 better off** on paper, but the abandonment assumption carries the whole result. If more customers leave, the picture changes fast. **Confirmation call on all 60 COD orders.** Assume 5 customers press 2 to cancel, 3 of those 5 would have been RTO, and the calls cost C in total. - RTO avoided: 3 × ₹200 = ₹600 - Net: **₹600 minus C**. The calls pay off if they cost less than ₹600 per 100 orders here. What the example shows is not which method wins (that depends entirely on your numbers) but which assumptions matter: - For a **discount**, the share of switchers who would have been RTO. - For a **fee**, how many customers abandon. - For a **call**, how many cancellations it catches and what the calls cost. You can measure the third directly: count the orders cancelled on the call each month. ## How to test before rolling out Each method can be tested on a slice of traffic before you commit: - **Prepaid discount:** show it to half your visitors for two to four weeks. Compare COD share, conversion rate and RTO between the two halves. Count the discount cost in full. - **COD fee:** test it the same way, but watch conversion closely from day one. If checkouts drop noticeably, stop the test early. - **Confirmation call:** turn it on for all new COD orders and count, each week, how many orders were cancelled on the call and how many were unreachable. Compare RTO on confirmed orders with your RTO before the change. Run one test at a time. If you change checkout and add calls in the same week, you won't know which one moved your numbers. ## Combining them The methods aren't exclusive. A common sequence: 1. **At checkout:** a modest prepaid nudge for customers happy to pay online. 2. **After the order:** a confirmation call on the COD orders that remain. 3. **For unreachable orders:** your own rule, such as hold high-value orders and ship the rest. The prepaid nudge shrinks the pool of COD orders; the call filters what's left. Neither changes how you treat customers who prefer cash. Note that Edesy's confirmation calls don't convert orders to prepaid during the call. The call asks one question, confirm or cancel, and writes the answer back to your store. ## When each one makes sense - **Prepaid discount**: when a meaningful share of your buyers are comfortable paying online and just need a reason. - **COD fee**: when COD is a convenience for your buyers rather than a necessity, and you have tested conversion carefully. - **Confirmation call**: when your COD share is high, your RTO cost per order is meaningful, and you don't want to touch checkout. ## Try it with your numbers Plug your order value, COD share, RTO rate and RTO cost into the [prepaid discount vs COD calculator](https://edesy.in/tools/prepaid-discount-vs-cod-calculator). If confirmation calls come out ahead, see [COD order confirmation calls](https://edesy.in/cod-order-confirmation) for how they connect to your store. ## Related reading - [How to calculate your real RTO cost per COD order](https://edesy.in/blog/rto-cost-per-cod-order-calculation-2026) - [What is COD order confirmation?](https://edesy.in/blog/what-is-cod-order-confirmation-2026) - [Fake COD orders: how to filter before shipping](https://edesy.in/blog/fake-cod-orders-how-to-filter-2026) ## Frequently Asked Questions ### Does a prepaid discount reduce RTO? It reduces COD orders, and prepaid orders rarely come back as RTO, so it can. But you pay the discount on every customer who switches, including those who would have accepted the COD parcel anyway. Whether it pays depends on how many of the switchers would actually have been RTO. ### Does charging a COD fee hurt conversion? It can. A fee at checkout adds friction, and some customers abandon rather than pay it or switch to prepaid. Test it on a share of traffic and watch both conversion and RTO before rolling it out. ### Can I use all three methods together? Yes, and many stores do. A prepaid nudge at checkout lowers the number of COD orders; a confirmation call on the COD orders that remain catches the ones the customer no longer wants before you ship. ### Which method should a small store try first? Usually the one that doesn't change checkout: confirming COD orders before dispatch. It only costs money on COD orders and doesn't risk conversion. Then test a prepaid nudge once you know your RTO cost per order.