How to cut COD RTO losses: OTP confirmation, part payment, and what actually works

Why COD orders come back

RTO means return to origin: the courier cannot deliver, or the buyer refuses, and the parcel comes back. The buyer may have changed their mind, been unreachable, given a wrong address or phone number, or ordered on impulse because paying nothing felt free. Each return costs you the outward freight, the return freight, usually a COD handling charge, the ad spend that won the order and sometimes damaged stock.

So the aim is fewer wasted shipments, not fewer COD orders. COD brings buyers who would not pay online, and you want to keep them while filtering out the orders unlikely to be accepted.

Step 1: measure before you change anything

Open Home and read the COD and returns card. It splits your orders into prepaid and COD and shows your RTO rate, including parcels the courier lost, for the dates you choose. The Customers list adds an RTO rate for each buyer: yellow above 10% and red above 30%, which also flags the customer. On Pro, the RTO heatmap shows which pincodes and states return most.

Write the numbers down. Change one control at a time for a few weeks, so you can tell which one moved them.

The controls, and where they are

OTP confirmation

In Settings, then Checkout, you choose Off, Smart risk, COD OTP or Every order OTP. COD OTP asks the buyer to verify their mobile number before a COD order is placed. Smart risk asks only when the shared refusal check flags the buyer, so it needs Pro. TeraCart checks this on the server, so a buyer cannot skip it. The code is six digits, lasts five minutes and goes by SMS.

An OTP stops orders placed with a wrong number or someone else's number. It does not make a buyer who is willing to refuse accept the parcel, so it works best with a deposit. After you switch it on, place a test COD order on your own store to see exactly what your shoppers see.

Part payment

Part payment, also called partial COD, takes a deposit online and leaves the balance for delivery. It needs COD switched on, Partial COD switched on and a PayU account, because Razorpay does not support it yet. You set one fixed deposit amount for the store, and an order at or below that amount cannot use it. The buyer pays the deposit, and the courier is told to collect only the balance.

A buyer who has already paid something has a reason to accept the parcel. If a parcel still returns, TeraCart does not refund or keep the deposit for you. You refund it from the order page, up to the amount paid, so say in your terms whether the deposit is refundable.

Repeat refusers: Profit Shield on Pro and Max

When a buyer refuses a parcel, TeraCart records it against their customer profile and flags them above a 30% refusal rate. Profit Shield is the Home card that reports the results. The switches behind it are Block high-risk COD orders and Network fraud checks, in Settings, Fraud protection. With blocking on, a flagged buyer is offered prepaid only, and TeraCart also checks a shared list of refusal signals from other TeraCart stores. New entries in that list hold keyed hashes of phone numbers and emails, plus pincodes, not the readable values, and you never see which store reported a buyer.

A blocked buyer sees that cash on delivery is not available for the order and can pay online instead. Home then shows how many risky COD orders were stopped and how many buyers paid online instead, with a rupee figure labelled as an estimate. A Monday report summarises the week by email, and by WhatsApp if you turn that on.

Shipping and tracking

With Shiprocket connected, COD orders sync every few minutes, and checkout offers COD only in pincodes where a COD courier serves. Couriers are ranked by price, speed and reliability. Return statuses come from Shiprocket's tracking. Delhivery and DTDC send no such updates, so mark a lost parcel yourself with Mark as lost by courier. Lost parcels count against your profit, never against the buyer.

What is not there yet

• A minimum order value for COD, or scoring of how good an address looks.
• A WhatsApp message that asks the buyer to reply YES to confirm a COD order.
• Automatic refund or forfeit of the deposit when a parcel returns.
• A working NDR queue fed by the courier. The screen exists, but it is not filled automatically.

No single control removes RTO, and we have no measured results from TeraCart stores to quote. Treat any platform that promises one percentage for every brand with caution.

Questions people ask