Cash on delivery
Method of package delivery where payment is made upon receipt
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Advantages and disadvantages for retailers
Advantages of COD for online or mail order retailers:
- 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.
Disadvantages of COD for online or mail order retailers:
- Orders might be returned as buyers are less committed to the purchase than if they had paid in advance (which led to the eventual elimination of C.O.D. with many TV offers in the United States and Canada by the early 1980s).
- Logistics partners charge additional fees for COD orders.
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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$1,000 for cash, but C$5,000 for payment by check or money order.
Popularity in the developing world
COD remains a popular option with internet-based retailers in some countries, 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 payments over credit card payments and offer discounts if paid in cash, as it avoids credit card processing fees.
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 and Middle East are done by cash on delivery and this has also led to the growth of courier companies offering a COD service.