Payment is the last step before a sale, and it is where many orders are won or lost. If a customer cannot pay the way they want, they may leave. If you offer a method that brings you too many returns, you lose money. The right mix depends on what you sell and who you sell to.
This guide walks through the common payment methods in India, how they work for a small store, and how to reduce the returns that cash on delivery can bring.
The main payment methods
UPI
UPI has become one of the most familiar ways to pay in India, from tea stalls to large shops. Customers pay from apps they already use, often by scanning a QR code or approving a request, without entering card numbers.
For an online store, UPI is usually quick and familiar for customers, and the money reaches you through your payment gateway. Because it is so widely used, it is worth making UPI easy to find at checkout.
Debit and credit cards
Cards remain important, especially for higher-value purchases and for customers who prefer credit card rewards or EMI options. Some customers abroad or with international cards will also need this option, depending on your gateway settings.
Net banking
Net banking lets customers pay directly from their bank account. It is used less often than UPI for small purchases, but some customers, often older shoppers or those buying for a business, still prefer it.
Wallets and pay-later options
Depending on your payment gateway, you may also be able to offer wallets and pay-later options. These suit some audiences. Check what your gateway supports and what it costs.
Cash on delivery (COD)
With COD, the customer pays the delivery person in cash (or sometimes by UPI at the door) when the parcel arrives. Many Indian shoppers still prefer it, especially when buying from a store they have not used before, because they do not have to trust the store with money up front.
How online payments reach you
To accept UPI, cards and net banking on your website, you need a payment gateway. The gateway handles the secure payment and transfers the money to your bank account after deducting its fees, usually on a regular settlement schedule.
In UpMinutes, you connect your own Razorpay account. Customers pay by UPI, cards or net banking, and the money goes into your Razorpay account and then to your bank. UpMinutes does not take a commission on your sales. Razorpay charges its own payment processing fees, which you can see in your Razorpay account.
Setting up a gateway usually needs business details, a bank account and KYC documents. Start this early, as verification can take a few days.
Comparing prepaid and COD
Prepaid (UPI, cards, net banking)
- Money is received before you ship.
- Fewer cancelled or refused orders.
- Gateway fees apply.
- Some first-time customers may hesitate.
Cash on delivery
- Builds trust for new customers.
- Couriers usually charge an extra COD fee.
- You receive the money only after the courier remits it.
- Refused parcels cost you shipping both ways (RTO, or return to origin).
Neither is right or wrong. Many stores offer both, and guide customers gently towards prepaid.
Why COD returns hurt
When a COD parcel is refused, you usually pay for the outward shipping, the return shipping, and sometimes the COD fee, and you get nothing for it. The product may come back damaged or late, after a festival is over. Your stock is tied up while it travels.
Common reasons for refused COD parcels include impulse orders the customer regretted, orders placed by mistake or as a prank, customers who were not home, a cheaper option found elsewhere, and delivery that took longer than expected.
Practical ways to cut COD returns
1. Set a COD limit
Allow COD only up to a certain order value. Above that, ask for prepayment. This limits how much you can lose on a single refused parcel. UpMinutes lets you switch COD on or off and set an optional limit.
2. Confirm COD orders
A quick WhatsApp message or call after a COD order ("We have your order for ₹1,450, delivering to Coimbatore. Shall we ship?") catches mistakes and fake orders before you pay for shipping. Automatic WhatsApp and SMS order updates help customers remember they ordered.
3. Make prepaid more attractive
A small, honest incentive works: a modest discount for prepaid orders, a free gift, or faster dispatch. You can also charge a small COD fee to cover the extra courier cost, as long as you show it clearly before checkout.
4. Ship quickly and keep customers updated
The longer a parcel takes, the more likely the customer changes their mind. Dispatch promptly, and send tracking links so customers know when to expect it.
5. Be clear on the product page
Good photos, honest descriptions, sizes and a clear returns policy reduce the "this isn't what I expected" refusals. See writing product descriptions.
6. Restrict COD where it doesn't work
If certain areas or products repeatedly have refused deliveries, you can limit COD for them. Keep an eye on patterns rather than reacting to a single case.
Payments for WhatsApp and phone orders
Not every sale starts on your website. When a regular customer orders by WhatsApp or phone, you can create the order in your UpMinutes dashboard and send a Razorpay payment link. The customer pays by UPI or card, and the payment is attached to the order automatically. No more matching screenshots to chats. Read more in selling on WhatsApp and Instagram.
Refunds
Decide how you will refund customers before you need to. For prepaid orders, refunds usually go back through the payment gateway to the original method. For COD orders, you will need to refund by bank transfer or UPI. Write your refund policy clearly and follow it consistently.
Our suggested starting point
- Offer UPI, cards and net banking through a gateway.
- Offer COD if your customers expect it, with a sensible limit.
- Confirm COD orders before shipping.
- Give a small, clear reason to pay in advance.
- Review refused parcels monthly and adjust.
Start there, watch how your customers behave, and change the mix based on what you see rather than on guesswork.
You can set all of this up in UpMinutes with your own Razorpay account, with no commission on sales and no app fees. Start a free 14-day trial without a card, and see what is included on the features page.