Cash on Delivery in the GCC: Costs, Refusals and How to Cut Them

Cash on delivery (COD) used to be how most Gulf shoppers paid online. Not anymore.

Today most Saudis and Emiratis pay with cards, Apple Pay, mada or BNPL. Yet COD still matters for one group you badly want: first-time buyers trying a brand they don't know yet.

So COD isn't dead. It's a trust tool that wins first orders, and a few simple habits keep its cost under control.

You'll see how COD works, what it really costs per order, and the playbook GCC sellers use to cut refused parcels and move buyers to prepaid. There's a calculator to run your own numbers.

How does cash on delivery work?

With COD, the shopper pays when the parcel arrives instead of at checkout. The courier collects the money, then sends it to you later, minus its fees.

Here's the money flow:

1. Order: the shopper picks COD at checkout. Many stores add a small COD fee here.
2. Confirm: smart stores confirm the order by WhatsApp or OTP before they ship it.
3. Deliver and collect: the driver takes cash, or a card payment on a handheld terminal or payment link.
4. Reconcile: the courier matches cash to parcels and nets off shipping and COD fees.
5. Remit: the balance lands in your bank account on a set cycle, often weekly.

Some Saudi platform deals pay out twice a week. Whatever the cycle, get it in writing before you sign with a courier.

COD is built into Salla and Zid. On Shopify it's a manual payment method you switch on, then connect to a COD-capable courier. See our guide to setting up Shopify in Saudi Arabia.

Who still pays cash on delivery?

Fewer people every year. Checkout.com found MENA shoppers' COD preference halved in four years, and fell to about 10% in Saudi Arabia, the UAE and Kuwait.

The shift has a clear cause. Apple Pay and mada spread fast, and Tabby and Tamara made "pay later" normal. In 2025, e-payments made up 85% of all Saudi retail payments (SAMA).

So who's left? Mostly these shoppers:

• First-time buyers on a brand they've never tried, especially from Instagram, TikTok or Snapchat ads.
• Impulse buyers in fashion and electronics.
• Older and rural shoppers, and expats without a credit card.

That's why COD shares vary so much. Big marketplaces see little of it. A new D2C store can still see 40–60% of orders on COD at launch.

Here's the catch: as reliable buyers move to prepaid, the COD group that remains is riskier. Plan for it.

What does COD really cost?

COD looks cheap because the courier fee is small. The real cost is in the parcels that never get paid for.

Each COD order carries four costs:

• The courier COD fee. In Saudi Arabia that runs from about SAR 3 to SAR 14 per parcel (see the chart). Some platform deals add a small percentage of the order on top.
• Refused and failed deliveries. You pay outbound and return shipping, repacking, and you lose the sale.
• Slow cash. Your money sits with the courier for a week or two. A store doing SAR 300,000 a month in COD can easily have over SAR 100,000 tied up.
• Admin. Confirmation calls, daily reconciliation and the odd short-cash dispute.

The fee spread matters less than delivery success. A courier that charges SAR 3 but fails more first attempts will cost you more.

So when you compare couriers, ask each one for its first-attempt delivery rate, COD fee and payout cycle. Pick on all three, not on price alone.

Worked example: 100 COD orders vs 100 prepaid

Take a Saudi fashion store selling a SAR 230 item. Each order costs SAR 70 in stock and SAR 20 to ship. Winning it takes about SAR 40 in ads.

A refused parcel costs SAR 15 to send back. Packaging and apps add about SAR 7 per order, and card plus Shopify fees take about 4.5% of the price.

Here's what 100 orders earn under each payment mix:

The prepaid mix earns about 70% more, even though card fees cost more than the COD fee.

Why? Each refused parcel burns about SAR 78: shipping both ways, handling, and the ad spend that won it. The stock comes back, but that money doesn't.

Try it with your own numbers:

Refused, failed or returned: what's the difference?

These three get mixed up, but they have different causes and different fixes:

Refused and failed parcels together make up your RTO (return to origin). Returns come later and need their own process. Our COD returns guide covers that side.

How to cut failed COD deliveries

You can't stop every refusal. But most COD-heavy stores can cut RTO by half with a few simple habits.

Sellers who add confirmation and address checks typically report RTO dropping from around 30% to around 10%. Work through these in order:

1

Confirm every COD order before you ship

Send an automatic WhatsApp message within 2–4 hours with a one-tap confirm button. Cancel orders nobody confirms within your set window. This one step cuts COD RTO by 10–15 points.

2

Verify the phone number at checkout

A WhatsApp or SMS one-time password (OTP) stops fake numbers and prank orders. Shopify OTP apps cost from about USD 5 a month.

3

Get the address right

Use address autocomplete and a map pin. In Saudi Arabia, make the 8-character National Address Short Address a required field. In the UAE, require a landmark or building name.

4

Ask for a deposit on risky orders

Take 10–20% upfront, or just the shipping fee, from new customers and high-value carts. Shoppers who've paid something are far more likely to accept the parcel.

5

Block repeat refusers

Keep a list of phone numbers with past refusals. Require prepayment from them, and from high-risk areas or very large carts.

6

Keep shoppers in the loop

Share live tracking and a narrow delivery window. Send a WhatsApp message on delivery day with the driver's contact.

The full setup, with app options and message templates, is in our guide to cutting fake COD orders with OTP, WhatsApp and deposits.

How to move shoppers to prepaid and BNPL

The cheapest COD order is the one that turns into a prepaid order. You don't need to remove COD to get there. You just make prepaid the easier, better deal.

What works in the Gulf:

• Order your checkout. Put Apple Pay, mada or cards and BNPL above COD.
• Reward prepaid. Give SAR or AED 5–10 off, or free express shipping, for paying online.
• Show the COD fee. A small, clearly shown fee nudges people to pay upfront.
• Add BNPL. Tabby and Tamara pay you upfront and carry the risk if a shopper doesn't pay. Tamara says merchants see up to 50% less COD after adding it.
• Win the second order. Repeat buyers trust you now, so offer them a prepaid-only perk.

BNPL fees typically run about 3–6% of the order. At a 25% COD refusal rate, that's often cheaper than COD on mid-priced orders. Compare the two in Tabby vs Tamara.

Should you offer cash on delivery?

For a new brand selling direct to Gulf shoppers, yes, at least at launch. COD wins the first order from people who don't trust you yet. Then your job is to shrink it.

Start with COD switched on and confirmation running from day one. Then track your COD share and RTO every week, and push prepaid harder as your brand earns trust.

Notes for Saudi stores

• National Address is mandatory. Since 1 January 2026, couriers can refuse, hold or return parcels without a valid National Address. Make the Short Address required at checkout. See the Saudi National Address rule.
• Know your platform's courier deals. On Salla, SMSA charges SAR 8 plus 2% of the order for COD. Aramex charges SAR 8 plus 1%, and both pay out twice a week.
• COD is small overall. Cash was about 8% of Saudi e-commerce payments in 2025 (Worldpay), so your COD share should fall fast as you grow.
• Plan for Ramadan. Sellers report refusals climbing around Ramadan, so tighten confirmation before peak season.

Notes for UAE stores

• Addresses are the weak point. There's no national address code, so require a landmark, building name and map pin.
• RTO runs high. COD orders get refused two to three times as often as prepaid ones. A healthy target is under 10% RTO overall.
• Shopify Payments works here. The UAE is the only GCC country where it does, so you can take cards and Apple Pay without Shopify's extra third-party transaction fee.
• Negotiate remittance. Jeebly guarantees 7 days and Quiqup pays weekly. Compare UAE courier companies on payout speed, not just rates.

Notes for cross-border sellers

• You need somewhere for the cash to land. Couriers remit to a local bank account. Without a GCC entity, use a 3PL, aggregator or merchant-of-record partner that pays you abroad.
• International RTO is brutal. Shipping a refused parcel back to China or Europe rarely pays. Keep stock in a Saudi or UAE warehouse so you can offer next-day COD.
• Ship DDP. COD shoppers refuse parcels with surprise duty or VAT at the door, so prepay those charges.
• Expect slower cash. Cross-border COD remittance often takes two weeks or more.
• BNPL needs local currency. Saudi BNPL must be priced in SAR, so a USD store can't simply add Tabby or Tamara.

Need a partner that collects COD and pays you out? Browse COD logistics providers, or ask us to match you with one. It's part of our GCC payments guides.