Cash on delivery (COD), sometimes called collect on delivery or cash on demand, is the sale of goods by

mail order Mail order is the buying of goods or services by mail delivery. The buyer places an order for the desired products with the merchant through some remote methods such as: * Sending an order form in the mail * Placing a telephone call * Placing a ...

where

payment A payment is the voluntary tender of money or its equivalent or of things of value by one party (such as a person or company) to another in exchange for goods, or services provided by them, or to fulfill a legal obligation. The party making the p ...

is made on delivery rather than in advance. If the goods are not paid for, they are returned to the

retailer Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...

. Originally, the term applied only to payment by cash but as other forms of payment have become more common, the word "cash" has sometimes been replaced with the word "collect" to include transactions by

check Check or cheque, may refer to: Places * Check, Virginia Arts, entertainment, and media * ''Check'' (film), a 2021 Indian Telugu-language film * ''The Checks'' (episode), a 1996 TV episode of ''Seinfeld'' Games and sports * Check (chess), a thr ...

money order A money order is a directive to pay a pre-specified amount of money from prepaid funds, making it a more trusted method of payment than a cheque. History The money order system was established by a private firm in Great Britain in 1792 and was ...

credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the o ...

s or

debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but u ...

Advantages and disadvantages for retailers

The advantages of COD for online or mail order retailers are: *The customer does not need to own a

to purchase *

Impulse purchase In the field of consumer behavior, an impulse purchase or impulse buying is an unplanned decision by a consumer to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purcha ...

s may increase as payment is not due at the time of ordering *The credibility of retailers may be increased because the consumer only has to pay when the item is delivered The disadvantages of COD for online or mail order retailers are: *Orders might be returned as buyers are less committed to the purchase than if they had paid in advance (which lead to the eventual elimination of C.O.D. with many TV offers in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

and

Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...

by the early 1980s). *Logistics partners charge additional for COD orders

Limits

Most operators impose a limit on the amount of money that can be collected per delivery or per day using COD services. Limits may be higher for non-cash payments.

Canada Post Canada Post Corporation (french: Société canadienne des postes), trading as Canada Post (french: Postes Canada), is a Crown corporation that functions as the primary postal operator in Canada. Originally known as Royal Mail Canada (the opera ...

, for instance, applies a limit of C$1000 for cash, but C$5,000 for payment by check or money order.

Popularity in the developing world

In some countries COD remains a popular option with internet-based retailers, since it is far easier to set up for small businesses and does not require the purchaser to have a credit card. Many small businesses prefer cash payment to credit card payment, as it avoids credit card processing fees. Some shops also offer discounts if paid in cash, because they can offer a better price to the consumer. COD is a widely used model in India. The overwhelming majority of e-shopping transactions in the Middle East are COD. Sixty percent of online transactions in the

UAE The United Arab Emirates (UAE; ar, اَلْإِمَارَات الْعَرَبِيَة الْمُتَحِدَة ), or simply the Emirates ( ar, الِْإمَارَات ), is a country in Western Asia (The Middle East). It is located at th ...

and Middle East are done by cash on delivery and this has also led to the growth of courier companies offering a COD service.

References

External links

{{Authority control Payment systems Payment terms Payment methods in retailing Postal systems

Advantages and disadvantages for retailers

Limits

Popularity in the developing world

See also

References

External links