The rise of services such as Klarna and Afterpay have revolutionized the way we shop, and allow you tomake purchases without having to pay the full price at check out.
These services are loosely based on a pre-existing service called collect on delivery, which is still employed by UPS and other companies- so what is it, and how does it work? If you’d like to find out, keep reading!
What Is “Collect on Delivery” at UPS In 2023?
Collect on delivery is a service wherein goods can be sold by mail order and paid for at the time of delivery in 2023. If the recipient doesn’t pay for the item upon delivery, it’s returned to sender. Collect on delivery is made safe by the fact that UPS only accepts business, cashiers, or personal checks, or money orders.
If you’re interested in using UPS’ collect on delivery service, or you just want to learn more about how this service works and why it’s used, be sure to check out the rest of the article!
What Is UPS Collect on Delivery?
Collect on delivery, also known as cash on delivery or cash on demand, is a service that allows goods to be sold by mail order and paid for upon delivery, rather than before the item is shipped.
Collect on delivery is considered to be the blueprint for other services such as Klarna or Afterpay.
They are similar in the way that they allow the recipient to purchase an item without having to pay the full price up front.
The main difference is that programs such as Klarna and Afterpay handle all business including payments online.
Also, both Klarna and Afterpay pay for the purchase up front, essentially lending the recipient of the item the remaining balance of the purchase.
The payments made to Klarna or Afterpay after the purchase don’t go to the shipper of the product, but are meant to repay Klarna/Afterpay for their initial investment.
Collect on delivery, however, cuts out the middle man entirely.
The shipper of the item ships the package in good faith that the recipient will offer payment for the item upon receiving it, without receiving any kind of initial investment.
Then, once the item is delivered, the recipient gives the courier some form of payment, typically a type of check, which is then returned to the sender.
UPS allows anyone shipping a package to use the collect on delivery service, as long as it is properly noted on the label at the time of shipping.
Why Does UPS Offer Collect on Delivery?
There are numerous advantages and disadvantages to using collect on delivery for retail packages.
Some of the advantages of collect on delivery are the following:
- The customer does not need a credit card or bank account to make the purchase
- The retailer earns credibility by allowing the recipient of the package to delay payment until they have received their item
- The retailer may see an increase in impulse purchases from their business, due to the fact that payment is not due at the time the item is ordered
- Collect on delivery minimizes the shipper’s bank fees and processing costs when accepting physical checks
While the advantages of collect on delivery may be appealing, there are some disadvantages that should be considered as well, such as:
- Orders can easily be refused or returned, since the recipient is less committed to the item than if they had paid in advance
- Collect on delivery services do come at an additional cost, usually around $10 with UPS. This is due to increased pressure to deliver the shipment on time, as well as additional efforts to collect payment from the recipient
When considering whether or not collect on delivery might be right for your next UPS package, it’s also important to note that this service isn’t always available.
Collect on delivery is only offered by UPS if a package is travelling in certain locales, such as the following:
- The EU
- The United States
- Puerto Rico
This means that while collect on delivery can technically be used for international packages, there are some strict limitations concerning the origin and destination of the package.
There are also restrictions on the type of shipping service collect on delivery can be added to.
For example, collect on delivery can’t be used for packages shipped with 3 Day Select or UPS Ground.
If you’d like to read more on what collect on delivery is, and how you can ship packages using collect on delivery with UPS, you can check out this page of the UPS website.
How Does Collect on Delivery Work at UPS?
Now that we’ve covered what collect on delivery is, we can start to dive in to how exactly it works.
Let’s say, for example, that a company would like to minimize monthly bank fees while expanding its consumer base to include people who may not have to pay with a credit card.
This company, in order to meet it’s goals, would be a great candidate for UPS collect on delivery.
After opting-in to the collect on delivery program, the company essentially approves UPS couriers to collect payment for shipments on their behalf.
When a courier delivers the package, they will collect the amount listed on the collect on delivery tag on the package’s label.
Next, they will then either mail the collected amount to the shipper, or deposit the funds directly into the shipper’s bank account.
To read more about direct deposit collect on delivery services, versus the traditional mailing route, you can check out the UPS page on COD Enhancement Services.
The courier delivering the collect on delivery package will usually attempt to deliver the package and collect payment three times.
If there are three missed delivery attempts, the package is returned.
Couriers do not accept cash as a form of payment for collect on delivery packages, as this creates unnecessary risks for the courier and UPS.
The payment methods UPS accepts for collect on delivery packages are:
- Business checks
- Personal checks
- Cashier’s checks
- Money orders
All checks that need to be addressed should be made out to the sender of the package, not UPS.
It’s important to keep in mind that, in addition to UPS refusing cash or currency as a form of payment for collect on delivery packages, UPS also refuses credit or debit card payments.
If you’re interested in reading more about the ins and outs of how collect on delivery works, you can check out this helpful article from Franklin Parcel.
To know more, you can also read our posts on whether or not UPS charges by weight or size, if UPS delivers to door, and why is UPS so expensive.
UPS collect on delivery is a service offered by UPS that allows for packages to be shipped from retailers to consumers before the customer actually pays for the package.
This helps eliminate the possibility of the item being lost, stolen, or damaged after the customer has already paid for the item, which increases the credibility (and the sales) of the retailer.