Cash on delivery (COD), sometimes called payment on delivery, cash on demand, payment on demand or collect on delivery 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 an order by telephone call ...

where

payment A payment is the tender of something of value, such as money or its equivalent, 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 or philanthropy desir ...

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 the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesal ...

. 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 Check" (''The Amazing World of Gumball''), a 2015 episode of ''The Amazing World of Gumball'' ...

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 Systems similar to modern money orders can be traced back centuries. Paper documents known ...

s, credit cards 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 card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either ...

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 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. 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 The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

and

Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...

by the early 1980s). *Logistics partners charge additional fees 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 (, trading as Canada Post (), is a Canadian Crown corporation that functions as the primary postal operator in Canada. Originally known as Royal Mail Canada (the operating name of the Post Office Department of the Can ...

, for instance, applies a limit of C$1,000 for cash, but C$5,000 for payment by check or money order.

Cash on delivery order management

Cash on Delivery (COD) is a widely practiced payment method in e-commerce, allowing customers to make payments for their orders in cash upon delivery. Managing COD orders involves a straightforward and reliable process to ensure seamless transactions between online retailers and customers. Order Processing and Payment Status: *When a customer places an order with the cash on delivery option, the online retailer's administrative panel displays the payment status as "Pending." This status reflects the fact that the payment is yet to be collected from the customer. *Upon successful delivery of the ordered item, the delivery personnel collects the payment in cash from the customer. The online retailer is then responsible for updating the payment status to "Paid" on the admin panel. This update confirms that the payment has been successfully received for the order. *The handling of the shipping status may vary depending on the e-commerce platform being used. In some cases, the shipping status is automatically set to "Delivered" once the payment status is updated to "Paid." This process helps track the progress of the order, allowing both the retailer and the customer to verify that the item has been successfully delivered. *Upon placing an order with the COD payment method, customers receive an email confirming that their order has been created and is currently being processed. Subsequently, the merchant and customer communicate to determine the delivery time, manual payment methods, and other details.

Accounting

Cash accounting The cash method of accounting, also known as cash-basis accounting, cash receipts and disbursements method of accounting or cash accounting (the EU VAT directive vocabulary Article 226) records revenue when cash is received, and expenses when th ...

is an advantageous approach for eCommerce businesses handling Cash on Delivery (COD) payments, allowing revenue recognition only when the payment is received. With real-time revenue recognition, this method ensures accuracy in financial reporting, simplifies the accounting process, and provides a transparent view of the company's financial performance. By recording revenue upon successful collection of payment, cash accounting facilitates efficient management of COD orders, benefiting both the business and its stakeholders.

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 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 The United Arab Emirates (UAE), or simply the Emirates, is a country in West Asia, in the Middle East, at the eastern end of the Arabian Peninsula. It is a federal elective monarchy made up of seven emirates, with Abu Dhabi serving as i ...

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

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