A:

Cash on delivery and delivery versus payment describe different procedures and timing of payments. Cash on delivery describes a transaction in which the payment of a good or service is made when the good or service is delivered. Delivery versus payment is a type of transaction that deals with securities in which the cash payment must be made before or during delivery.

Cash on delivery generally deals with goods, and the transaction stipulates that the purchaser must pay for the goods when they are delivered. If the purchaser fails to pay for the goods upon delivery, the goods are returned to the seller.

For example, assume a purchaser agrees to make a cash payment for electronic devices that are being shipped from China. The buyer and seller sign a shipping contract, which stipulates the buyer make the cash payment when the goods are delivered. However, if the buyer fails to make the payment, he is responsible for all shipping costs and the goods are returned to the seller. Therefore, the buyer and seller agree to a cash on delivery transaction.

Conversely, delivery versus payment, also known as delivery against payment, is a type of transaction that deals with securities. This transaction stipulates that securities are delivered to a specified recipient only when a payment is made. It is a settlement method to ensure transfer of securities only occurs when payments are made.

For example, assume an investor wishes to buy stock of a company and agrees to a delivery versus payment settlement procedure. Therefore, the stock is only delivered if the investor pays the agent before or on receipt of the security.

RELATED FAQS
  1. What are the differences between installment sales and credit sales?

    Determine the differences between credit sales and installment sales, which businesses often offer their customers for deferred ... Read Answer >>
  2. What is the difference between CIF and FOB?

    Learn about the differences between FOB and CIF international trade agreements and the advantages and disadvantages for sellers ... Read Answer >>
Related Articles
  1. Investing

    The Ins And Outs of Seller-Financed Real Estate Deals

    There's more than one way to buy or sell a house. Seller financing presents yet another unique option.
  2. Insights

    The Balance Of Payments

    The "Balance of Payments" is a record of all payments or monetary transactions between a particular country and other nations during a specific time period. It provides a useful glimpse into ...
  3. Investing

    The Pros and Cons of Owner Financing

    Details on the upside and risks of this type of deal for both the owner and the buyer.
  4. Financial Advisor

    What Is Mode of Premium?

    Your decision on how frequently to make life insurance payments, or your mode of premium, can have a big impact on your total costs.
  5. Tech

    Are Bitcoin Payment Services Similar to Credit Cards?

    Here's how Bitcoin Payment Services works and if it's a threat to credit card giants like Visa and Amex.
  6. IPF - Mortgage

    Understanding the Mortgage Payment Structure

    When you get a mortgage to buy a home, you need to understand the structure of your payments, so you know how expensive the whole thing will ultimately be.
  7. Personal Finance

    How Amazon's Restaurant Delivery Service Makes Money (AMZN)

    Amazon's delivery service acts as a loss leader to corner the market now before providing high margin revenue in the future.
  8. Investing

    New App Makes Amazon the Uber of Shipping (AMZN, UPS)

    Amazon's new shipping app strengthens its position as a logistics and delivery powerhouse.
  9. Investing

    Target: Can Same-Day Delivery Compete With Amazon?

    Traditional retailers have to vie with Amazon Prime's two-day delivery and its new SWA platform.
  10. Tech

    Bitcoin Transactions Vs. Credit Card Transactions

    We provide an overview of the differences between bitcoin and credit card transactions, and the advantages of using one over the other.
RELATED TERMS
  1. Delivery Point

    The delivery point is the place specified in futures contracts ...
  2. Good Delivery

    Good delivery occurs when a security's transfer is unhindered ...
  3. Delivery Notice

    A delivery notice is part of a futures contract that defines ...
  4. Payment Option ARM Minimum Payment

    A payment Option ARM Minimum Payment is an option to make minimum ...
  5. Down Payment

    A down payment is a type of payment made in cash during the onset ...
  6. Mass Payment

    Mass payment is a method of paying multiple recipients online ...
Trading Center