"Cash on Delivery" redirects here. For album by Ray Cash, see Cash on Delivery (album).
For the 1954 film sometimes known by this title, see To Dorothy a Son.
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Collect on delivery (COD) is a financial transaction where the payment of products 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 products 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 cards or debit cards. 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 in the United States. 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. But it helps to establish the credibility of online retailer as the consumer pays only after taking delivery of ordered item. COD remains in heavy use in other Middle Eastern and developing countries for e-shopping, for example, EXXAB.com operating in Jordan and Saudi Arabia.
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. Many small businesses prefer cash payment over credit card payment, since that way they do not have to pay extra 1-2 per cent of the price to card company for a transaction. Some shops also offer discounts (the same 1-2 per cent) if paid in cash, because they can offer a better price to the consumer.
This method has also become popular in India with the upcoming Online Retailing business as lot of Indians prefer to pay in cash traditionally since there is no risk of not receiving the product from the online retailer when the payment is done beforehand. The overwhelming majority of e-shopping transaction in the Middle East are COD; with cancelation rates soaring due to the lack of sense of obligation. However, in the Middle East the case is a little different because their largest logistics and shipping company (Aramex) offers a COD service in return to a very low fee, making it an easier option and facilitating it to further reinforce the COD method of payment. Even Aramex complains about the huge number of returns in shipments from their e-commerce clients.
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