USPS Collect on Delivery (COD): A Comprehensive Guide

In today‘s digital age of online shopping and electronic payments, you may be surprised to learn that the United States Postal Service still offers a service called Collect on Delivery, or COD. This old-school payment method, which has been around for over a century, allows the recipient to pay for an item upon delivery rather than in advance. While it may seem antiquated compared to one-click ordering and digital wallets, there are still some scenarios where Collect on Delivery comes in handy.

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As a retail and consumer expert, I‘ve taken an in-depth look at the USPS COD service to provide this comprehensive guide explaining what it is, how it works, the applicable mail services and fees, and more. Whether you‘re an online seller considering offering COD, a curious consumer who‘s received a COD package before, or simply interested in learning about this fascinating relic of the pre-internet mail-order era, read on for all the details.

What is USPS Collect on Delivery?

USPS Collect on Delivery is a service that allows the recipient of a package to pay for the item at the time of delivery. Also known as COD or Cash on Delivery, it provides a way for buyers and sellers to complete a transaction without exchanging payment in advance, similar to paying for something in-person at a store.

Here‘s how it works: The sender mails the package to the recipient and indicates the amount to be collected upon delivery. When the package arrives, the recipient pays the mail carrier the COD amount using cash, check, money order, or debit card. USPS then transmits the collected payment back to the sender, minus a small fee.

Essentially, COD shifts the financial risk of the transaction from the buyer to the seller. The seller must front the cost of the item plus shipping and COD fees upfront. They only receive payment once the item is successfully delivered and paid for by the recipient. For the buyer, COD allows them to inspect the item at delivery before committing payment, providing some peace of mind against damaged goods, incorrect items, or outright scams.

A Brief History of Collect on Delivery

To understand the origins of COD, we have to go back to the late 1800s and the early days of mail-order commerce. In that era, if you wanted to buy something from a catalog or advertisement, you typically had to send cash or a check to the merchant in advance and wait for your goods to arrive sight-unseen. This required a level of trust in the merchant that not all consumers were comfortable with.

In 1913, the US Post Office Department (the predecessor to USPS) introduced Collect on Delivery as a way to facilitate mail-order transactions. By allowing payment upon delivery, COD gave consumers more confidence to purchase through the mail. It also opened up mail-order to the half of American households that did not have checking accounts at the time.

COD proved popular and was widely used for much of the 20th century, with the Post Office collecting billions of dollars in COD payments each year at its peak in the 1950s. The service played an important role in the growth of catalog retailers like Sears, Montgomery Ward, and JCPenney.

Usage of COD has declined dramatically in recent decades with the rise of credit cards and digital payment services, but USPS has continued to offer it as an option. Surprisingly, even with the advent of ecommerce and online payment platforms, there is still some demand for COD in certain use cases and among certain demographics.

Sending a COD Package Through USPS

So how exactly does COD work from the sender‘s perspective? Let‘s break down the process step-by-step:

  1. First, you‘ll need to check if your shipment is eligible for COD service. Most domestic USPS mail categories support COD, including Priority Mail Express, Priority Mail, First-Class Mail, USPS Retail Ground, and more. The main restriction is that the amount to be collected cannot exceed $1,000.

  2. Take your package to the Post Office along with a completed PS Form 3816 – the COD form. You can get this form from the Post Office or print it from the USPS website. Note that you cannot deposit COD packages in collection boxes – you must hand them to a clerk at the Post Office or your rural carrier.

  3. On the COD form, indicate the amount to be collected (in $5 increments), the recipient‘s name and address, and where you want the collected payment sent. You can choose to have the funds sent to your home address or held at the Post Office for pick-up.

  4. Pay the applicable postage for your package based on the mail service, weight, and dimensions, just like any other shipment. On top of this, you‘ll need to pay the COD fee, which varies based on the amount to be collected (more on this later).

  5. USPS will transport your package to the recipient‘s address and attempt delivery. If the recipient pays the COD amount, the mail carrier will accept payment on your behalf and the package will be handed over.

  6. If the delivery attempt is unsuccessful, USPS will leave a notice and retry delivery in subsequent days. After 3 failed attempts, the package will be held at the local Post Office for up to 15 days before being returned to you.

  7. Once the recipient‘s payment is processed, USPS will forward the funds to you, minus a small money order fee if paid by cash. Checks and money orders are mailed as-is. It typically takes 2-3 weeks from the delivery date to receive payment.

There are a few other things to keep in mind as a COD sender:

  • You can request a return receipt or electronic delivery confirmation for an additional fee to verify delivery
  • COD packages automatically include USPS Tracking
  • Insurance is available for COD shipments for a fee
  • You can instruct USPS to hold the package for pick-up at the recipient‘s local Post Office instead of attempting delivery by selecting "Hold For Pickup" service

Receiving a COD Package Through USPS

Now let‘s look at COD from the recipient‘s point of view. If you‘ve been notified that a package sent to you is arriving COD, here‘s what to expect:

  1. The mail carrier will arrive at your address and attempt to deliver the package, just like any other mail. However, they will request the indicated COD payment amount from you before handing over the package.

  2. You can pay the mail carrier with cash, personal check, money order, or PIN-based debit card (as of 2022, credit cards are not accepted for COD). If paying by cash, the mail carrier will first convert it into a money order and charge you the issuing fee. Checks and money orders will be sent to the sender as-is.

  3. Once payment is rendered, the mail carrier will give you the package. You should receive a receipt detailing the transaction and payment method.

  4. If you are not home to accept the delivery, USPS will leave a reminder notice with instructions. You can arrange for redelivery or pick up the package at your local Post Office. COD packages are held for 15 days before being returned to sender.

  5. Note that COD funds are immediately transmitted to the sender once collected, so refunds or returns must be handled directly with the sender.

As a COD recipient, keep in mind:

  • Do not accept or pay for a package if it appears damaged or tampered with – notify USPS immediately
  • Make sure to have an accepted form of payment ready, as the carrier cannot complete delivery without collecting payment
  • You can authorize another person to accept and pay for a COD package on your behalf

USPS Mail Services That Allow COD

Collect on Delivery is available with most domestic mail services offered by USPS, including:

  • Priority Mail Express (except Priority Mail Express Military and Open & Distribute)
  • Priority Mail
  • First-Class Mail
  • First-Class Package Service – Retail & Commercial
  • USPS Retail Ground
  • Media Mail
  • Library Mail
  • Bound Printed Matter
  • Parcel Select (except Parcel Select Lightweight)

COD is not available for Periodicals, Marketing Mail, or any international services. The maximum amount collectible per COD shipment is $1,000.

USPS COD Fees

In addition to standard postage for the shipment, senders must pay a COD fee based on the amount to be collected. As of January 2022, the COD fees are as follows:

Amount to be collected – Fee:
$0.01 to $50 – $9.10
$50.01 to $100 – $11.30
$100.01 to $200 – $13.75
$200.01 to $300 – $16.20
$300.01 to $400 – $18.65
$400.01 to $500 – $21.10
$500.01 to $600 – $23.55
$600.01 to $700 – $26.00
$700.01 to $800 – $28.45
$800.01 to $900 – $30.90
$900.01 to $1000 – $33.35

These fees compensate USPS for the added labor of collecting and processing the recipient‘s payment. For senders, it‘s important to factor COD fees into the total cost of the transaction. Recipients should also be aware that choosing COD may mean a higher price compared to pre-paying.

Scenarios Where COD Still Makes Sense

With so many digital payment options available today, COD is certainly not as prevalent as it once was. However, there are still some situations where buyers and sellers may prefer COD over other methods:

  • Transactions with unknown or untrusted parties. Since payment isn‘t made until delivery, COD offers some protection against scams, non-receipt, or items that are "not as described." This can be useful for in-person transactions arranged online, like Craigslist or Facebook Marketplace purchases.

  • Buyers without credit/debit cards or banking services. Roughly 5% of American adults are "unbanked," meaning they have neither a checking nor savings account. For these individuals, COD allows a way to shop remotely while paying in cash.

  • Custom, bespoke, or made-to-order items. Some specialized merchants may use COD as a way to ensure payment for custom work before shipping. COD can act as an escrow service in these cases.

  • Independent sellers without digital payment capabilities. Not every small business can afford credit card processing or is tech-savvy enough to use P2P apps. For them, COD may be the only way to accept distance payments.

Tips for Buyers & Sellers Using COD

If you‘re thinking about utilizing COD as either a buyer or seller, consider these tips for a smooth transaction:

For buyers:

  • Make sure you understand what form of payment is required and have it ready for the mail carrier
  • Inspect the package thoroughly before accepting and paying for it
  • Keep all receipts and documentation until you are fully satisfied with the purchase
  • Try to be present for the COD delivery attempt to avoid delays and extra post office trips

For sellers:

  • Communicate all COD costs and terms clearly to the buyer upfront to avoid surprises
  • Use Registered Mail with COD for high-value items, as it offers the most security and insurance
  • Pack items securely to prevent damage during transit, which could result in the package being refused
  • Be prepared to wait 2-3 weeks to receive the collected payment from USPS

The Future of USPS COD in an Ecommerce World

There‘s no denying that COD volume has dropped precipitously in the 21st-century economy. In 2021, the Post Office collected less than $10 million in COD payments, down from over $7 billion (inflation-adjusted) at the service‘s peak in the mid-20th century. Digital payment platforms, widespread credit/debit card adoption, and robust consumer protection laws have made many of the original benefits of COD redundant.

However, COD has managed to persist as a niche service, in large part by serving segments of the population and market underserved by the digital economy. As long as there are unbanked consumers, cash-based businesses, and trust gaps in peer-to-peer commerce, it seems that COD will continue to have a role.

While it‘s hard to imagine COD staging a major comeback, it‘s also unlikely to completely disappear anytime soon. Like the proverbial last check written, we may see a "last COD delivery" at some point in the future – but not just yet. For now, this old-fashioned payment method remains a fascinating and still useful service offered by our national postal carrier.