Collect on delivery shipping, or COD, is a service where the carrier collects payment from the recipient when the package is delivered and then forwards that money to you, the sender. Through USPS, you can collect up to $1,000 per article, with fees between $12.10 and $45.10 depending on the collection amount.1United States Postal Service. 500 Additional Mailing Services UPS and FedEx run their own COD programs with higher limits and different rules about which payment types they’ll take at the door. The appeal is straightforward: you don’t release the goods until the buyer pays, and the buyer doesn’t pay until the goods arrive.
The Basic Three-Party Setup
Three parties are involved in every COD shipment: you, the carrier, and the buyer. You ship the package and tell the carrier how much to collect. When the driver or letter carrier arrives, they ask the recipient for that amount before releasing the package. If the recipient pays, the carrier holds the funds and sends them to you. If the recipient refuses or can’t pay, the package comes back.
The tradeoff is cost and timing. COD fees stack on top of regular postage, remittance takes time, and a refused delivery means you’ve paid shipping in both directions with no sale to show for it.
USPS Fees and the Collection Cap
The most USPS will collect on a single article is $1,000.1United States Postal Service. 500 Additional Mailing Services The fee is a flat amount tied to the collection tier, added to whatever postage you’re already paying. As of the January 2025 price schedule:
- $0.01–$50.00: $12.10
- $50.01–$100.00: $14.95
- $100.01–$200.00: $18.30
- $200.01–$300.00: $21.65
- $300.01–$400.00: $25.00
- $400.01–$500.00: $28.35
- $500.01–$600.00: $31.70
- $600.01–$700.00: $35.05
- $700.01–$800.00: $38.40
- $800.01–$900.00: $41.75
- $900.01–$1,000.00: $45.10
Adding COD Restricted Delivery, which limits who can accept and pay for the package, costs another $7.70.2United States Postal Service. Notice 123 – Price List
COD is available on most domestic mail classes, including Priority Mail Express, Priority Mail, First-Class Mail, USPS Ground Advantage, Parcel Select, Bound Printed Matter, Library Mail, and Media Mail. It’s not available for international shipments or for mail to APO, FPO, or DPO addresses.1United States Postal Service. 500 Additional Mailing Services
How the Recipient Pays and How You Get the Money
At delivery, USPS accepts cash, a personal check, or a money order from the recipient, all made payable to you rather than to USPS.1United States Postal Service. 500 Additional Mailing Services Only one payment type per delivery. The letter carrier checks the recipient’s ID before handing over the package. If you don’t want to accept personal checks, you can restrict payment to certified funds on the COD form.
What arrives in your mailbox depends on how the recipient paid. A check written to you is forwarded as-is. If the recipient paid cash, USPS charges them an additional money order fee and mails you a postal money order.3United States Postal Service. Domestic Mail Manual S921 Collect on Delivery (COD) Mail High-volume senders can enroll in electronic funds transfer through the National Customer Support Center and skip the paper entirely.1United States Postal Service. 500 Additional Mailing Services
USPS doesn’t publish a guaranteed remittance timeline. The Domestic Mail Manual notes that mailers can report delays over 60 days to the Postal Inspection Service, which suggests the outer edge of what USPS treats as normal.3United States Postal Service. Domestic Mail Manual S921 Collect on Delivery (COD) Mail Most payments arrive well before then, but COD isn’t fast money.
UPS and FedEx
Private carriers work differently, and the differences matter if you’re shipping high-value goods or need a specific payment type.
UPS takes money orders, business checks, personal checks, and cashier’s checks. It does not accept cash.4UPS. UPS C.O.D. Statements Online If your buyer plans to hand cash to the driver, UPS is off the table. UPS supports much higher collection amounts than USPS, with declared value protection up to $50,000 per package for qualifying shipments.
FedEx is more flexible. Depending on how you configure the shipment, it can accept cash, guaranteed funds like cashier’s checks and money orders, or company and personal checks. You pick the acceptable payment type when you set up the label. FedEx publishes COD fees in its annual service guide, and rates vary by service level and package specs.
Neither carrier uses a paper tag. You configure the COD amount, payment type, and remittance instructions online when you generate the shipping label.
Setting Up a USPS COD Shipment
USPS requires PS Form 3816, which acts as both the COD label and the instructions for the delivery carrier.5United States Postal Service. PS Form 3816 – Collect on Delivery (COD) Service Each article gets a unique COD number. Blank forms are available at any post office or through a USPS business account.
Fill in the exact amount to collect, the verified delivery address, your remittance address or account, and whether you’ll take any payment or only certified funds. The form attaches to the package so the carrier sees the collection amount and payment instructions at the door.6United States Postal Service. Domestic Mail Manual S921 Collect on Delivery (COD) Mail – Section: 2.0 COD Forms Double-check the remittance address. A payment sent to the wrong place can take weeks to trace through postal channels.
Insurance and Claims
USPS COD includes indemnity coverage up to $1,000, based on the amount being collected or the amount of insurance you want, whichever is higher.7United States Postal Service. Shipping Insurance and Delivery Services You can file a claim if the package is lost or damaged, or if the COD remittance never reaches you.8United States Postal Service. 609 Filing Indemnity Claims for Loss or Damage
There are limits. If you can only produce the outer packaging as evidence, COD indemnity may be capped at $50.8United States Postal Service. 609 Filing Indemnity Claims for Loss or Damage Items sent COD without the recipient’s prior consent aren’t eligible for indemnity at all. Hold onto your mailing receipt and documentation of the item’s value; both are needed to support a claim. For extra security on higher-value items, you can combine COD with Registered Mail on First-Class or Priority Mail. The $1,000 collection cap still applies, but the tighter chain of custody reduces the risk of loss.1United States Postal Service. 500 Additional Mailing Services
Where COD Costs Sellers Money
The largest exposure is refusal. A buyer who changed their mind, moved, or entered a fake address just doesn’t answer the door. The package comes back, and you’ve paid outbound shipping, the COD fee, and return shipping for nothing.
Fraudulent orders are a recurring problem in COD ecommerce. Common patterns include undeliverable addresses, fake customer identities, and batches of orders placed from throwaway accounts. Verifying buyer contact information before shipping is the baseline defense, but it doesn’t remove the risk.
Payment instruments carry their own risk. A personal check taken at delivery can bounce, leaving you with neither the goods nor the money. Restricting payment to money orders or cashier’s checks removes that possibility but narrows the pool of buyers who’ll follow through. On high-value items, the restriction is usually worth it.
The fees themselves also eat into margins. A $500 item shipped USPS COD costs $28.35 in COD fees alone, on top of postage. For low-margin goods, that overhead can make COD unworkable. If you use COD regularly, build the fee into your pricing rather than absorbing it after the sale.