Cash on delivery (COD, C.O.D.), sometimes called collect on delivery or cash on demand,is the sale of goods by mail order where payment is made on delivery rather than in advance. If the goods are not paid for, they are returned to the retailer.
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 checks, money orders, credit cards or debit cards.
Advantages and disadvantages
The advantages of COD for online or mail order retailers are:
- The customer does not need to own a credit card to purchase
- Impulse purchases 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
- 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, for instance, applies a limit of C$1000 for cash, but C$5,000 for payment by check or money order.