The day I placed my first order online, I had one firm condition that I would only pay after receiving the product and seeing it with my own eyes. Like many Ugandans venturing into online shopping, I insisted on Cash on Delivery (COD). Despite the growing digital revolution across Uganda, from bustling streets of Kampala to rural villages in Karamoja, most Ugandan online shoppers still prefer the traditional “touch before you pay” approach. This way of payment has shaped how e-commerce works in Uganda, with almost every successful online business adapting to meet this demand. The trust gap between buyers and sellers remains wide, and COD serves as the bridge that makes online shopping possible for many Ugandans. This deep-rooted preference affects everything from how businesses operate to the growth rate of Uganda’s digital economy. But why exactly do Ugandans cling so firmly to COD, and what does this mean for our country’s digital future? Let’s dive in and explore the reasons, how COD works, and what it means for our online shopping future.
What is Cash on Delivery (COD)?
Cash on Delivery is a payment method where customers pay for goods at the time of delivery rather than in advance. Instead of paying through mobile money or credit card before the shop sends your order, you wait until the delivery person brings the item to your home, office, or shop. Then, you check the product, make sure it’s what you ordered, and pay with cash right there. Unlike in Western countries where COD might include card payments upon delivery, in Uganda, it almost exclusively means physical cash. The delivery person collects this cash and returns it to the seller. Most Ugandan online shops charge a small delivery fee on top of the product price, usually between 3,000 to 10,000 shillings in Kampala depending on the distance and item size.
This method is the most popular among Ugandan shoppers because it feels safer for many Ugandans who are still getting used to shopping online.
How COD Works in Uganda’s Online Shopping Scene
COD is a big part of how online shopping works in Uganda, especially since many Ugandans are still new to buying things on the internet. When you are shopping on a website like Dombelo, you add the items you want to your cart and go to the checkout page. There, you will see an option to choose how you want to pay. If you pick COD, the shop will prepare your order and send it to you through a delivery person, often a boda boda rider or a courier like CourieMate. When the delivery person arrives, you check the item to make sure it’s what you ordered and it’s in good condition. If everything is okay, you pay the exact amount in cash. If you don’t like the item or it’s not what you expected, you can refuse to take it, and the delivery person will return it to the seller. Most online sellers in Uganda now include “Pay on Delivery” as their default payment option. For example, Jumia Uganda prominently displays “COD Available” on product listings because they know Ugandans prefer this option. The delivery timeframe varies, from same-day delivery in Kampala to several days for remote areas like Kabale or Kisoro.
Top Reasons Why Ugandans Prefer COD in 2025
1. Distrust in prepayment systems
Many Ugandans don’t fully trust paying for things online before they see the product. They worry that if they pay first, the shop might not send the item, or they might send something different. For example, if you pay for a TV online and the shop doesn’t deliver, it’s hard to get your money back. This fear comes from stories of people losing money to online shops that disappear after getting paid. So, most people feel safer using COD because they only pay after they see the item with their own eyes. COD removes this risk entirely.
2. Fear of online scams and fraud
Scams are a big problem in online shopping, and many Ugandans have heard stories of people being cheated. Some fake shops ask you to pay online, then they disappear, or they send you a fake product. For instance, you might order a nice phone, but when it arrives, it’s just a toy phone that doesn’t work. With COD, you don’t have to worry about this because you can check the item before paying. This fear of fraud makes COD a better choice for many people who don’t want to risk losing their money. The National Information Technology Authority Uganda (NITA-U) reported over 3,500 cases of online shopping fraud in 2024 alone, heightening consumer caution.
3. High prevalence of counterfeit products online
Uganda’s market struggles with counterfeit products. When shopping online, customers cannot physically verify product authenticity before purchase. COD allows shoppers to inspect items for quality and authenticity before parting with their money. This is especially important for electronics, designer clothing, and cosmetics where fakes are common. If you order, for example, a Samsung phone and the delivery person brings a fake one, you can refuse to pay and send it back. This way, you don’t lose your money on counterfeit items.
4. Unreliable or inconsistent delivery services
Uganda’s addressing system remains challenging outside major towns. Many areas lack proper street names or house numbers, making deliveries complicated. Customers worry about paying for items that might get lost or delivered to wrong addresses. With COD, this risk shifts to the seller, giving customers peace of mind. For example, if you’re in a village in Arua and the delivery person can’t find your place, you don’t lose money because you haven’t paid yet. This makes COD a safer option when delivery services are not always reliable.
5. Limited access to digital payment methods
Despite growth in mobile money usage, many Ugandans still lack access to digital payment systems. Bank card penetration remains low at about 9% of the population. Even among those with mobile money accounts, many prefer using these services for sending money rather than online shopping. For many, physical cash remains more accessible and familiar.
6. Cultural preference for cash after product inspection
Ugandans traditionally prefer to haggle and inspect goods before purchasing. This shopping culture extends from village markets to urban shopping. Online prepayment contradicts this deeply ingrained practice. We Ugandans want to touch and check what we are buying. Our parents taught us to never buy a pig in a bag. When you go to the market, you don’t pay for tomatoes until you have seen them and made sure they are fresh. Online shopping with COD lets us do the same thing. You can check if the clothes fit or if the electronics work before you pay. This habit of inspecting products first is why many Ugandans feel more comfortable with COD.
7. Suits Uganda’s cash-based economy
Despite government efforts to promote cashless transactions, Uganda remains largely a cash economy. Many Ugandans receive their income in cash and conduct most transactions with physical money. COD aligns perfectly with this economic reality, allowing online shopping to fit into existing financial habits rather than forcing new ones.
E-commerce Platforms in Uganda That Offer COD
The demand for COD has shaped Uganda’s e-commerce landscape. Major platforms like Jumia Uganda prominently advertise their COD options, knowing this payment method drives most of their sales. Local platforms including Jiji, Market by MoMo, Kikuubo Online, Tunda, TilyExpress, Mobile Shop UG, Neketa, Ellydeals, Dombelo etc., have built their entire business models around cash payments upon delivery.
Even international sellers entering the Ugandan market have had to adapt this way of payment. Those who initially required prepayment often struggled until they introduced Cash on Delivery. For instance, when Kilimall first launched in Uganda without COD, they captured minimal market share until they introduced the option in 2019. Platforms like Ubuy and Kikuu that have refused to embrace COD are struggling to earn trust of Ugandans, ultimately impacting their sales negatively.
Social media commerce, particularly through TikTok, Facebook, X (formerly Twitter), Instagram, and WhatsApp, dominates Uganda’s online shopping scene. These informal sellers almost exclusively operate on COD terms, using personal networks of boda boda riders for delivery and cash collection. This approach has enabled thousands of small businesses to join e-commerce without sophisticated payment systems.
How COD Impacts E-commerce Growth in Uganda
COD has both helped and hindered e-commerce growth in Uganda. On the positive side, it has significantly increased adoption of online shopping among people who would otherwise remain skeptical. The Uganda Communications Commission estimates that over 80% of online purchases in Uganda use COD, showing its crucial role in market development.
However, COD creates operational challenges that slow business growth. Cash handling increases risks of theft and fraud for delivery personnel. Rejected deliveries waste resources, with return rates as high as 30% for some sellers. These inefficiencies increase operational costs, which are ultimately passed to consumers through higher prices.
The COD model also limits the geographical reach of e-commerce. Many sellers only deliver to areas where they have reliable delivery networks and trust the delivery process. Remote areas often remain underserved because the risk of sending products without guaranteed payment is too high.
Challenges COD Creates for Online Sellers
For businesses, COD creates significant operational challenges. Firstly, cash flow becomes unpredictable since payment is not guaranteed until delivery. This makes inventory management difficult, especially for small businesses with limited capital.
Secondly, the logistics of cash handling create security concerns. Delivery personnel carrying cash become targets for theft. One delivery company in Kampala reported that its riders experienced over 40 cash-related security incidents in 2024 alone.
Thirdly, COD leads to higher return rates. When customers have no financial commitment before delivery, they more easily reject items. Some businesses report that up to 35% of COD orders are rejected upon delivery. This creates wasted delivery costs and inventory management problems.
Finally, COD complicates accounting and transparency. Cash transactions are harder to track and verify, creating opportunities for employee theft and making tax compliance more difficult.
COD vs. Mobile Money: Why Cash Still Wins
Despite the widespread adoption of mobile money services like MTN Mobile Money and Airtel Money in Uganda, physical cash still dominates e-commerce payments. Several factors explain this preference.
Transaction costs play a key role. Mobile money withdrawals and payments incur fees that many Ugandans prefer to avoid. When purchasing a 50,000 shilling item, the additional mobile money fees may seem unnecessary when cash is an option.
Network reliability issues also push consumers toward cash. Mobile money services occasionally experience downtime or delayed transactions. No one wants their purchase delayed because “the network is down.”
Also, many Ugandans maintain limited mobile money balances, using the service primarily for specific transactions rather than as a complete financial system. A customer might receive money via mobile, immediately withdraw most of it as cash, and then use that cash for various purchases including online orders.
Digital Alternatives to COD in Uganda
Despite the dominance of COD, several digital payment alternatives are slowly gaining traction. Mobile money integration with e-commerce platforms offers the most promising alternative. Services like Jumia Pay have attempted to build trust by offering buyer protection and easy refund processes.
Bank cards remain limited in usage but are growing among urban professionals. International payment platforms like PayPal have minimal penetration due to limited integration with local banks and high fees.
Pay-later services are emerging as an interesting middle ground. Companies like Paylater Uganda and M-Kopa allow customers to receive products and pay in installments, addressing the trust issue while gradually shifting away from immediate cash payments.
Agent banking networks like those operated by Equity Bank and Centenary Bank now offer points where customers can make e-commerce payments, providing a bridge between traditional banking and digital commerce.
What Needs to Change to Shift Ugandans from COD to Prepayment
If Ugandans are to move beyond COD dependence, there must be several fundamental changes.
First, consumer protection laws need strengthening and consistent enforcement. The Uganda National Bureau of Standards and the Uganda Communications Commission must create clear mechanisms for resolving e-commerce disputes.
Education about online shopping safety would help build confidence in digital payments. Many Ugandans avoid prepayment simply because they don’t know how to shop safely online or identify reputable sellers.
Transparent return and refund policies would also build trust. When customers know they can easily get their money back if products don’t meet expectations, prepayment becomes less risky.
Lower transaction costs for digital payments would remove a major barrier. If mobile money providers reduced or eliminated fees for e-commerce transactions, adoption would likely increase.
Finally, reliable delivery tracking systems would give customers confidence that their orders are actually being processed after payment. Real-time visibility into delivery status helps bridge the trust gap created when payment and product receipt are separated by time.
Future of COD: Will It Stay Relevant Beyond 2025?
COD will likely remain dominant in Ugandan e-commerce for years to come, though its share may gradually decrease. Urban areas with better digital infrastructure may shift faster toward prepayment options, while rural areas will likely maintain stronger COD preferences.
The growing youth population, more comfortable with digital systems, may drive increased adoption of prepayment methods. However, this transition will be evolutionary rather than revolutionary.
Mobile money will likely evolve to better serve e-commerce needs, potentially creating hybrid models that offer the security of COD with the convenience of digital payments. For example, systems where payment is held in escrow until delivery could gain popularity.
Government initiatives like the National Payments System Act implementation may accelerate the shift away from cash, though their impact will depend on effective implementation and public education.
Conclusion
Cash on Delivery remains the backbone of Uganda’s e-commerce ecosystem for good reasons. It addresses legitimate concerns about trust, product quality, and payment accessibility in ways that digital alternatives haven’t yet matched. The preference for COD isn’t merely resistance to change but a rational response to Uganda’s economic and technological realities.
For e-commerce to thrive in Uganda, businesses must continue embracing COD while gradually introducing more sophisticated payment options. The future likely involves hybrid approaches that maintain the security of physical inspection while reducing the inefficiencies of cash handling.
As Uganda’s digital infrastructure improves and consumer protection strengthens, the balance may shift. But for now, the simple truth remains – Ugandans want to see what they’re buying before parting with their hard-earned money. Any business hoping to succeed in Uganda’s online marketplace must respect this preference while gently guiding customers toward the digital future that awaits.
