Collect on delivery shipping is a service where the carrier collects payment from your buyer before handing over the package, then sends that money back to you. USPS will collect up to $1,000 per shipment; UPS will collect up to $50,000. FedEx discontinued its domestic COD service in 2023, so those are your two options.1UPS. Process a COD Shipment It’s a useful tool when you don’t want to extend credit to a buyer but also don’t want to demand prepayment.
What It Costs
Both carriers charge a per-package fee on top of regular postage. USPS uses a sliding scale tied to the amount being collected. UPS charges a flat rate.
USPS COD fees in 2026:2United States Postal Service. Notice 123 – Price List
- $0.01–$50.00: $13.05
- $50.01–$100.00: $16.10
- $100.01–$200.00: $19.75
- $200.01–$300.00: $23.40
- $300.01–$400.00: $27.05
- $400.01–$500.00: $30.70
- $500.01–$600.00: $34.35
- $600.01–$700.00: $38.00
- $700.01–$800.00: $41.65
- $800.01–$900.00: $45.30
- $900.01–$1,000.00: $48.95
On a $100 sale, that $16.10 fee is a 16% surcharge before you even pay postage. Decide upfront whether you’re absorbing the fee or passing it to the buyer.
UPS runs $21.00 to $22.50 per COD package in 2026, depending on service level.3UPS. 2026 UPS Rates The flat rate is friendlier once you’re collecting more than a few hundred dollars, and it’s the only route for shipments above the $1,000 USPS ceiling.
USPS COD fees include insurance up to the amount being collected, capped at $1,000.4United States Postal Service. Insurance and Extra Services If the package is lost, damaged, or the payment never reaches you, that coverage applies. You only need to buy additional insurance if the item is worth more than the COD amount.
How Your Buyer Pays
Payment rules differ by carrier, and this catches sellers off guard. Telling your buyer to have cash ready for a UPS delivery guarantees a failed attempt.
USPS accepts cash, PIN-based debit cards, personal checks, and money orders made payable to the sender. You cannot restrict which method your buyer uses.5United States Postal Service. Collect on Delivery When a buyer pays cash, the postal carrier collects an extra money order fee, because USPS converts the cash into a postal money order before mailing it to you.6United States Postal Service. PS Form 3816 – COD Mailing and Delivery Receipt Warn your buyer so they aren’t blindsided.
UPS does not accept cash at all. Recipients pay with a money order, personal check, business check, or cashier’s check. Either way, a single instrument covers the full amount. Splitting the payment across two checks or combining cash with a money order is not allowed.
The Paperwork
For USPS, every COD shipment needs a completed PS Form 3816. It’s a multi-part label that acts as both the shipping tag and the transaction record. You fill in the COD amount, the COD fee, the postage, and the total, and include a full return address so the carrier knows where to send your payment.7Postal Explorer. Domestic Mail Manual 503 – Extra Services Grab the form at any post office or print it through a commercial shipping account. Keep your sender’s copy. If the payment goes missing later, that receipt is your proof the shipment existed.
UPS uses its own COD label, generated through your UPS shipping account. The driver scans it at delivery, which triggers the collection prompt.1UPS. Process a COD Shipment The dollar amount on the label needs to match any invoice inside the box, because mismatches can delay delivery or cause the wrong amount to be collected.
What Happens at the Door
The package moves through the normal delivery network to the recipient’s local facility, and the driver attempts delivery at the label address. Before releasing the package, the carrier collects the full amount and gets a signature. USPS requires the recipient to show an acceptable primary form of identification.7Postal Explorer. Domestic Mail Manual 503 – Extra Services
If nobody’s home or the recipient can’t pay, the driver leaves a notice and returns the package to the local facility. With USPS, the recipient has up to 10 days to come in with payment and claim the item, though you can specify a shorter window on Form 3816.5United States Postal Service. Collect on Delivery
Under standard COD, any authorized person at the address can accept the package and pay. If you need it delivered only to the named person, USPS offers COD Restricted Delivery for an extra $8.40.2United States Postal Service. Notice 123 – Price List The addressee has to be an individual, not a business name.7Postal Explorer. Domestic Mail Manual 503 – Extra Services
How the Money Reaches You
Once the carrier collects the check or money order (or converts cash into a money order), USPS mails the payment to your return address via First-Class Mail.5United States Postal Service. Collect on Delivery There’s no published guaranteed timeline for that leg, and no separate tracking on the remittance envelope, so build waiting time into your cash flow.
Commercial shippers can use USPS’s electronic funds transfer option to speed things up. When the recipient pays cash at an EFT-enabled post office, the money is deposited into the sender’s bank account within 48 hours instead of traveling as a physical money order.5United States Postal Service. Collect on Delivery EFT is available to enrolled mailers shipping from offices equipped with Retail System Software.
UPS forwards the collected payment to you after the driver records the transaction, running through its own internal system rather than the postal network.
The Risks You’re Taking On
Refused or Unclaimed Packages
If the buyer refuses the package or the holding period runs out, the carrier sends it back and you pay the return shipping.5United States Postal Service. Collect on Delivery With USPS, you’re out the original postage, the COD fee, and the return postage, none of which is refundable. UPS charges a return fee based on the applicable service rate for the return trip. On a $200 item, a failed sale can easily cost you $35 to $40 in freight and fees. If you’re dealing with an unfamiliar buyer, weigh that risk against just requiring prepayment.
Bounced Checks
A personal check collected at the door can bounce like any other. USPS COD insurance covers failure to receive a postal money order or the recipient’s check, but it does not guarantee the check clears your bank.5United States Postal Service. Collect on Delivery Your recourse then runs through your state’s bad-check statute, which typically requires a formal demand letter and a waiting period before you can sue. For small amounts, chasing the money often costs more than it’s worth.
Carriers generally aren’t liable for accepting a check that later bounces, because they don’t verify solvency. USPS won’t let you restrict payment methods at all, so if a bounced check would genuinely hurt, USPS COD isn’t the right tool. UPS, which excludes cash and accepts cashier’s checks, gives you a better chance of insisting on guaranteed funds through your buyer’s agreement.
Missing Payment After Delivery
If tracking confirms the package was delivered but your payment never showed up, call USPS at 1-800-ASK-USPS (1-800-275-8777) to open an inquiry. You have to wait at least 60 days from the mailing date before filing.5United States Postal Service. Collect on Delivery The COD fee’s built-in insurance covers a genuinely lost remittance. Keep your Form 3816 sender copy and your tracking number, because both are required to support the claim.
Sales Tax Is on You
The carrier collects whatever dollar figure appears on the COD form and nothing more. Calculating sales tax is the seller’s job. Build any tax you owe into the COD amount before you ship, because the driver isn’t going to add it at the door. Most states treat COD fees and shipping charges as part of the taxable transaction when they’re tied to physical goods, though the specifics vary by state. Get it wrong and you either short-collect and owe tax out of pocket, or you overcharge the buyer and end up issuing a refund.