Cash on delivery
Encyclopedia
Collect on delivery (COD) is a financial transaction
where the payment
of product
s and/or services
received is done at the time of actual delivery rather than paid-for in advance. The term is mainly applied to consumer product
s purchased from a third party, where payment is made to or collected by the deliverer
from the recipient rather than the sender, in the way that a collect call
is also charged to the recipient instead of the caller. The delivery company in turn remits the charge for the item itself to the company which shipped it, keeping only the portion which it charged for the shipping service.
This type of transaction is better known as cash on delivery. However, as other forms of payment became more common, the word "cash
" was replaced with the word "collect" to incorporate transactions with checks, credit card
s or debit card
s. Even with this, COD has become much less common now, and most companies will not ship this way.
Originally, COD delivery was made when a company owns its own transportation means. That way the delivery person can collect on site. However, because USPS
, UPS
, FedEx
, OnTrac
, and other commercial shipping companies are often cheaper, most companies use COD to mean that the bill for the product is delivered with the product, and payment is expected immediately. Because of the commonality of credit cards and instant payment methods through the Internet, COD purchasing has become obsolete in most cases. However, it remains a standard method of payment for ordering products and services produced quickly and near the point of delivery; this is particularly common with the ordering of food, and it is the standard model for pizza delivery
services, though some pizza restaurants require a credit card number before they will send a delivery, due to fraud and prank callers.
In some countries this 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.
Financial transaction
A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
where the payment
Payment
A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
of product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
s and/or services
Customer service
Customer service is the provision of service to customers before, during and after a purchase.According to Turban et al. , “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer...
received is done at the time of actual delivery rather than paid-for in advance. The term is mainly applied to consumer product
Consumer product
A consumer product is generally any tangible personal property for sale and that is used for personal, family, or household for non-business purposes. The determination whether a good is a consumer product requires a factual finding, on a case-by-case basis...
s purchased from a third party, where payment is made to or collected by the deliverer
Package delivery
Package delivery or parcel delivery is the shipping of packages or high value mail as single shipments. While the service is provided by most postal systems, private package delivery services have also existed in competition with and in place of public postal services.-Package delivery in the...
from the recipient rather than the sender, in the way that a collect call
Collect call
A collect call in the USA and Canada or reverse charge call in the UK and other countries is a telephone call in which the calling party wants to place a call at the called party's expense...
is also charged to the recipient instead of the caller. The delivery company in turn remits the charge for the item itself to the company which shipped it, keeping only the portion which it charged for the shipping service.
This type of transaction is better known as cash on delivery. However, as other forms of payment became more common, the word "cash
Cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...
" was replaced with the word "collect" to incorporate transactions with checks, credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
s or debit card
Debit card
A debit card is a plastic card that provides the cardholder electronic access to his or her bank account/s at a financial institution...
s. Even with this, COD has become much less common now, and most companies will not ship this way.
Originally, COD delivery was made when a company owns its own transportation means. That way the delivery person can collect on site. However, because USPS
United States Postal Service
The United States Postal Service is an independent agency of the United States government responsible for providing postal service in the United States...
, UPS
United Parcel Service
United Parcel Service, Inc. , typically referred to by the acronym UPS, is a package delivery company. Headquartered in Sandy Springs, Georgia, United States, UPS delivers more than 15 million packages a day to 6.1 million customers in more than 220 countries and territories around the...
, FedEx
FedEx
FedEx Corporation , originally known as FDX Corporation, is a logistics services company, based in the United States with headquarters in Memphis, Tennessee...
, OnTrac
OnTrac
OnTrac is a regional parcel carrier that serves the seven largest states in the Western U.S. OnTrac started as a small package delivery company in California in 1991, and has expanded to serve six additional states: Arizona, Nevada, Oregon, Washington, Utah and Colorado...
, and other commercial shipping companies are often cheaper, most companies use COD to mean that the bill for the product is delivered with the product, and payment is expected immediately. Because of the commonality of credit cards and instant payment methods through the Internet, COD purchasing has become obsolete in most cases. However, it remains a standard method of payment for ordering products and services produced quickly and near the point of delivery; this is particularly common with the ordering of food, and it is the standard model for pizza delivery
Pizza delivery
Pizza delivery is a service in which a pizzeria delivers a pizza to a customer. Delivery is normally made with an automobile, motor scooter, or bicycle.- Ordering :...
services, though some pizza restaurants require a credit card number before they will send a delivery, due to fraud and prank callers.
In some countries this 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.