What is USPS Collect on Delivery (COD)? Fees, limits, and setup explained

By: Marija Vujosevic, IB Manager, Customer Experience and Harry Whitehouse, IB Chief Innovation Officer

In the world of online shopping and subscription-based services, payment flexibility can directly impact delivery success and cash flow. Collect on Delivery (COD) through USPS offers a structured way for merchants to collect payment at the time of delivery, eliminating the need for credit cards or online payment channels.
For businesses looking to reduce payment risk or offer alternative payment options, COD can be a reliable and practical solution. For merchants shipping to Alaska, Hawaii, Puerto Rico, military addresses, or other non-continental U.S. locations, COD can add an additional layer of payment control within an already specialized delivery environment.

In this blog, we explore how USPS COD works, the available delivery models, and how merchants can integrate this service into their shipping strategy. 

What is Collect on Delivery? 

Collect on Delivery (COD) is a USPS service that collects payment from the recipient as part of the delivery process. USPS provides official guidance on how COD works, including fees, limits, and payment handling procedures. Amount collected typically represents the sales price of the merchandise inside the package. 

For merchants, COD serves as an alternative to traditional payment methods such as credit cards, PayPal, or other digital payment channels. It is often used for recurring subscription deliveries or in situations where payment collection at delivery provides additional assurance.
USPS allows a maximum COD collection amount of $1,000 per package.

Two delivery models: home delivery or post office pickup 
There are two primary COD label options available.

Option 1: Door delivery with Form 3816 (two labels)
Our software can produce the traditional USPS Form 3816 COD label. This “old-school” format is used when the merchant wants payment collected at the recipient’s address.
In this case:
⦁ Two labels are applied to the package.
⦁ One is the postage label.
⦁ One is the COD Form 3816.
⦁ The tracking number on both labels matches.
The carrier attempts delivery at the recipient’s address and collects payment at the door.

Option 2: Single-label post office pickup We also offer a newer single-label format that combines the postage label and COD form into one label.
In this model:
⦁ Only one label is required.
⦁ The shipment is sent to the Post Office nearest the recipient.
⦁ Payment must be made before the package is released.
This structure ensures that payment is collected before the item is handed over. If payment is not made, the package is returned to the merchant.

Recipients may pay by:
⦁ Cash
⦁ PIN-based debit card
⦁ Personal check
⦁ Money order payable to USPS

When a COD package cannot be delivered, USPS will typically hold the item at the local Post Office for up to 10 days, unless the merchant specifies fewer days.
The merchant pays both postage and COD fees at the time of mailing.

COD fees include insurance against:
⦁ Loss
⦁ Damage
⦁ Rifling
⦁ USPS failure to obtain payment (if the package was delivered)

Merchant payment via EFT 

USPS now offers Electronic Funds Transfer (EFT) as a modern alternative to the traditional money order process.
Under the traditional method, the carrier converts each collected payment into a Postal Money Order and mails it to the merchant.
The merchant must then:
⦁ Process each payment individually
⦁ Apply it to the correct order
⦁ Deposit each money order manually
This process can be time-consuming and administratively heavy.

With EFT:
⦁ Funds are deposited directly into the merchant’s bank account
⦁ Payments are consolidated
⦁ A detailed reconciliation report is provided for each deposit
⦁ Carrier workload is reduced
⦁ Access to funds is faster

For merchants shipping higher volumes, EFT significantly simplifies reconciliation and cash flow management.
To set up EFT, the merchant must:
1. Obtain a unique Mailer ID (MID) from USPS
2. Complete Form 3881X

The 3881X form links the Mailer ID (used as part of the tracking number) to the merchant’s bank account. As packages are delivered and payments collected, funds are consolidated and transferred directly to the merchant.
The International Bridge support team assists merchants through each step of this setup process.

When does COD make sense?
COD may be a strong fit for:
⦁ Subscription-based shipments
⦁ Customers who prefer not to use credit cards online
⦁ Situations where payment assurance is important
⦁ Higher-value goods under the $1,000 USPS limit
⦁ Businesses entering new markets where payment risk is higher
⦁ Deliveries to non-continental U.S. destinations where payment assurance is especially important.
While COD is not necessary for every shipment, it can provide structure, predictability, and payment control in the right circumstances.

Frequently asked questions about USPS COD 

• What is the maximum amount USPS will collect through COD?
  USPS allows up to $1,000 per package. 
• How long will USPS hold a COD package?
  Up to 10 days at the local Post Office, unless the merchant specifies fewer days. 
• How are COD funds returned to the merchant?
  Funds can be returned via traditional Postal Money Order or through Electronic Funds Transfer (EFT) for faster, consolidated deposits. 
• Can COD be used for APO/FPO/DPO shipments? 
• Yes. USPS COD can be used for shipments to military APO/FPO/DPO addresses, provided all customs and documentation requirements are met. 

Final thoughts 

Collect on Delivery offers merchants a practical way to collect payment at delivery while maintaining the reliability of USPS shipping. With flexible label options and modern EFT integration, COD can be structured to match your operational needs.
If you are evaluating whether USPS COD fits your shipping strategy, our team at International Bridge can guide you through setup, integration, and implementation.

Related shipping solutions 

Collect on Delivery can be combined with specialized routing strategies for Alaska, Hawaii, Puerto Rico, military addresses, and other non-continental U.S. destinations. 

Find out more about our Non-Con™ shipping solution designed for high-volume parcel shippers serving remote and non-continental markets. 

Contact us at: support@myibservices.com to learn more.