That way you don't have to pay service tax to the credit card company for the transaction.

Seems risky for a delivery driver to be walking around with a lot of cash.

More risky than with the products worth that cash?

Yes. Cash is fungible, has no transaction costs and negligible transportation costs.

Yes, that's a reasonable argument in its favour; I don't necessarily disagree. It's worth acknowledging though that not-cash has advantages (to a robber) in tax evasion/laundering.

Not-cash is probably harder to steal, but I'd have thought it preferable. (To a robber.)

Saving the credit card charge isn't a win. Turns out that operating cash-on-delivery has significant overhead due to the cost of handling the cash, accounting for it etc. More than that, returns are much higher when the customer hasn't paid for anything. As a result, almost all ecommerce sites in India incentivise you in one way or another to pay online. I know one that will give you $0.5 off if you pay online, which is approximately what COD would cost them.