Cash on delivery (COD) is a type of transaction in which the recipient makes payment for a good at the time of delivery. The terms and accepted forms of payment vary according to the payment provisions of a purchase agreement. Cash on delivery can also be referred to as collect on delivery since delivery may allow for cash, cheque or electronic payment.
COD shipping offers customers the advantage in time for saving to make a full payment. Alternatively, it also increases the risk that a customer will not plan appropriately for payment, leaving the purchase to be returned. Returned purchases forego intended profits and may require shipping return fees which are both disadvantages for the merchant.