What Does Collect on Delivery Mean? COD Carriers, Costs, and Risks

Collect on delivery, often shortened to COD, is a shipping arrangement in which the carrier collects payment from the recipient at the moment the package is handed over and then forwards those funds back to the sender. The carrier holds the package until the recipient pays in an approved form, which shields the seller from shipping goods that never get paid for and gives the buyer the reassurance of seeing the package arrive before any money changes hands. In exchange, both sides accept higher shipping costs, a limited menu of carriers, and consumer protections that are thinner than most people assume.

How a COD Shipment Actually Works

The sender tells the carrier the exact dollar amount to collect. That figure usually bundles the price of the goods, the shipping charge, and the COD service fee. When the driver arrives, they present the package, take payment in a form the sender has approved, and only then release the goods. The carrier sends the collected funds back to the sender, typically by mailing a money order or check to the return address on file.¹

Legally, the carrier is acting as the sender’s collection agent, not just a delivery service. If the driver hands over the package without collecting, or accepts a fraudulent check, courts have held carriers liable for the amount they should have collected.

Which Carriers Still Offer COD

The United States Postal Service is the most widely available option. USPS COD works with Priority Mail, Priority Mail Express, First-Class Mail, USPS Ground Advantage (retail and commercial), Parcel Select, Bound Printed Matter, Media Mail, Library Mail, and USPS Connect Local. The maximum USPS will collect on a single mailpiece is $1,000.²

UPS also offers domestic COD, with one significant catch: UPS drivers never accept cash. Payment has to be a check, money order, or cashier’s check.³

FedEx discontinued its domestic COD service in July 2023. Older guides that list FedEx as a COD carrier are out of date.

What COD Costs Through USPS in 2026

USPS charges a tiered fee based on the amount being collected or the insurance coverage requested, whichever is higher. The fee covers both the collection service and built-in insurance. As of January 2026:⁴

$0.01 to $50.00: $13.05
$50.01 to $100.00: $16.10
$100.01 to $200.00: $19.75
$200.01 to $300.00: $23.40
$300.01 to $400.00: $27.05
$400.01 to $500.00: $30.70
$500.01 to $600.00: $34.35
$600.01 to $700.00: $38.00
$700.01 to $800.00: $41.65
$800.01 to $900.00: $45.30
$900.01 to $1,000.00: $48.95

A restricted delivery add-on runs $8.40 and limits handoff to the specific addressee or an authorized agent.⁴ These COD fees stack on top of regular postage, so a $500 item ships for at least $30.70 in COD charges before you add the base rate. And the COD fee is nonrefundable, even when the recipient refuses the package.¹

What Payment the Driver Will Take

The accepted forms depend on the carrier and on what the sender authorized. USPS recipients can pay with cash, money orders, or cashier’s checks. Some senders also allow personal or business checks, though a bounced check after the package is already gone falls on the sender. Marking the shipment “cash only” eliminates that risk.

UPS runs differently. The default lets a driver take a business or personal check. If the shipper picks the “Cashier’s Check/Money Order Only” option, only cashier’s checks, money orders, official bank checks, or similar certified instruments will be accepted, and they must match the exact COD amount.³

Neither USPS nor UPS supports credit cards or mobile payment at the door for COD. If the buyer isn’t ready with an approved payment form, the package doesn’t get released.

What Happens at the Door

The driver verifies the payment against the shipping paperwork before releasing the package. For USPS, the recipient has to sign and legibly print their name on the delivery receipt before the mailpiece can be opened or handed over.⁵

Here’s a detail that surprises a lot of first-time COD buyers: you can’t open or inspect the contents before paying. The postal employee will hold the package so you can see the outside, including the sender’s name and address, but that’s the limit.⁵ You’re paying because a package showed up, not because you’ve confirmed what’s in it.

If nobody’s home, or the recipient refuses to pay, USPS holds the COD package at the local post office for up to 10 days, or a shorter window if the sender specified one. After that, the package goes back to the sender, who is responsible for return postage.¹ Combined with the nonrefundable COD fee, a refused package leaves the sender covering both legs of shipping with no revenue to show for it.

Where Consumer Protection Falls Short

The biggest gap is federal. The FTC’s Mail, Internet, or Telephone Order Merchandise Rule, which normally requires sellers to ship on time or offer refunds, explicitly does not apply to COD orders.⁶ The logic is that COD already protects buyers from paying for something that never ships, since payment only happens at delivery. But the usual federal refund and delay-notification rules don’t kick in.

Pair that exemption with the no-inspection rule, and the buyer picture looks weaker than it first appears. If you pay for a COD package and open it to find the wrong item or damaged goods, your recourse runs through the seller’s return policy or a general fraud complaint. There’s no COD-specific federal mechanism forcing the seller to make it right. On a high-value purchase, that trade-off is worth weighing against the comfort of not paying in advance.

Fraud Risk and Insurance Limits for Senders

The main hazard for senders is a fraudulent payment instrument. Because the carrier acts as the sender’s collection agent, failure to collect real money generally means the carrier owes the sender what should have been collected. Courts have carved out a practical exception when a forged check or money order looks genuine on its face, on the reasoning that drivers can’t verify every certified instrument. The safer route for wary senders is to lock down the payment type up front: cash only through USPS, or cashier’s check/money order only through UPS.

USPS COD fees include built-in insurance up to the collection amount, but the indemnity rules cap out fast in some scenarios. If a claim is filed with only the outer packaging as evidence, the payout is capped at $50. For negotiable items, currency, or bullion sent COD without Registered Mail, the maximum indemnity is $15.⁷ Senders who want stronger coverage can combine COD with Registered Mail on sealed Priority Mail or First-Class Mail items, which adds tracking and security that standard COD doesn’t provide.²

When COD Is Worth Using

COD fits a narrow set of situations well. A small business selling to a first-time buyer who won’t prepay gets a guaranteed collection mechanism without setting up card processing. A buyer who distrusts online prepayment gets confirmation that a real package arrived before parting with money. When neither party knows the other, the carrier acts as a neutral middle.

The economics push against it for most routine e-commerce. A sender shipping a $500 item through USPS pays at least $30.70 in COD fees on top of regular postage, absorbs return shipping if the buyer refuses, and loses the COD fee regardless. Prepaying with a credit card gives buyers stronger dispute rights than COD does. Where COD still earns its keep is cash-heavy trades, local delivery businesses, and transactions where the buyer genuinely can’t or won’t pay electronically before the goods ship.

1
USPS. Collect on Delivery
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Postal Explorer. DMM 503 Extra and Additional Services
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UPS. Process a COD Shipment
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Postal Explorer. USPS Notice 123 – January 2026 Price Change
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Domestic Mail Manual Archive. Conditions of Delivery
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Federal Trade Commission. Business Guide to the FTC’s Mail, Internet, or Telephone Order Merchandise Rule
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Postal Explorer. 609 Filing Indemnity Claims for Loss or Damage