(Rinny Mirari Ermiyanti)
Kutz, M (2016) in Chapter 7 of Introduction to
Electronic commerce describes several types of customer payments. e.g.: credit
card payment, payment on delivery, Smart Card, E-payment, etc.
In the realm of electronic commerce, various customer
payment methods have emerged to facilitate online transactions. This article
aims to explore two prominent payment methods, namely Cash Before Delivery
(CBD) and Cash on Delivery (COD), focusing on their features, advantages,
potential challenges, and recommended solutions. As a small online shop owner
on a marketplace platform, understanding the intricacies of these payment
systems is crucial for optimizing customer satisfaction and operational efficiency.
Cash Before Delivery (CBD):
CBD payments have gained significant popularity among
online shops in Indonesia. Contrary to its name, CBD transactions are cashless,
primarily utilizing transfer methods such as ATMs, bank counters, mobile
banking applications, debit cards, digital wallets, and credit cards. The
payment process involves customers making a full payment before the seller
initiates the product delivery. The marketplace system generates an invoice
based on the specified price, and upon verifying the payment, the seller ships
the product to the customer's designated address.
Benefits of CBD:
Non-cash transactions: CBD offers the convenience of
cashless payments, ensuring secure and hassle-free transactions.
Certainty for customers: By requiring upfront payment,
CBD assures customers that their desired products are reserved and paid for.
Enhanced security: Marketplaces often implement robust
security systems that safeguard both sellers and consumers from fraudulent
activities.
Promotions and discounts: CBD transactions facilitate
cost considerations, enabling sellers to offer more promotions and discounts to
attract customers.
Potential Challenges:
Stock management: If sellers fail to update their
stock accurately, customers may experience disappointment when they cannot
obtain the desired product despite making the payment.
Verification process: In the absence of an electronic
payment verification system connected to the bank, reliance on transfer
receipts alone can create opportunities for scammers to exploit customers with
fake receipts.
To mitigate these challenges, small online shop owners
rely on the marketplace's excellent stock management and accounting systems to
ensure accurate product availability and implement secure payment verification
protocols.
Cash on Delivery (COD):
COD payment method is being heavily promoted by
several marketplaces in Indonesia, particularly for fashion products. It offers
convenience to customers who only make payments upon receiving the goods. Some
online stores even provide return guarantees if the delivered product does not
match the order. COD transactions typically involve customers trying the
product before making payment to the courier.
Flow of COD payment system:
·
Customer selects the desired product and quantity.
·
Marketplace sends the invoice.
·
Seller dispatches the goods.
·
If the product matches the customer's request, payment is
made to the courier.
·
Courier transfers the payment to the marketplace's bank
account.
·
The marketplace pays the seller.
Benefits of COD:
Widened customer base: COD attracts various types of
consumers as it offers the convenience of paying after receiving the ordered
product.
No reliance on electronic payments: Many customers in
suburban and rural areas prefer a simple transaction process that involves
receiving, checking, and making cash payments without the need for debit or
credit cards or digital wallets.
Data security: COD payment systems reduce the risk of
sensitive data exposure, as customers are not required to share financial
information with sellers.
Building consumer trust: Customers can verify the
products before completing the transaction, eliminating the risk of losing
money and building trust.
Disadvantages and Potential
Challenges:
Complex accounting recording: Unlike electronic
payments, cash transactions require manual recording of income, expenses, and
balance sheets, posing challenges for sellers in terms of accounting accuracy.
Risk of loss: COD involves couriers handling
significant amounts of cash, increasing the risk of financial loss.
Delayed payment transfer: Expedited services often
require several steps before the funds collected by the courier are transferred
to the seller's account, causing delays in receiving payments.
Additional surcharges: Shipping companies may charge
sellers extra fees for offering COD as a payment option, adding to the overall
cost.
To overcome these challenges, sellers often include an
additional fee for customers who opt for the COD system, ensuring the cost
burden is shared.
Understanding the characteristics, advantages, and
challenges associated with different payment methods is essential for small
online shop owners. By comprehending the intricacies of Cash Before Delivery
(CBD) and Cash on Delivery (COD), sellers can optimize their operational
processes, enhance customer satisfaction, and mitigate potential issues.
Striking a balance between convenience, security, and cost considerations is
crucial in providing a seamless payment experience for online shoppers.
References:
Kutz, M. (2016). Introduction to electronic commerce: Combining business and
information technology.
Young, J.
(2022, September 23). Cash on delivery (COD): What it is and how it works.
Investopedia. Retrieved September 30, 2022, from http://shorturl.at/nOPQ3
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