Will govt stop Cash On Delivery for e-commerce?

The most important payment option for e-commerce business is cash on delivery; more than half of the business runs through this payment option. However, the Reserve Bank of India has made big disclosures about it.

After the RBI disclosures, it is believed that the e-commerce business will be reduced. In fact, in response to an RTI, the RBI has declared e-commerce's most preferred payment option cash on delivery as illegal. According to the RBI, cash on delivery can be 'Regulatory Gray Area'.

Half of the e-commerce companies in the country run by cash on delivery. Flipkart, Amazon and other e-commerce platforms offer cash on-delivery at the time of delivery of goods from third party vendors to their customers. RBI said in response to an RTI, "payments like Aggregators and Amazon-Flipkart are not authorized under the Intermediaries Payments and Settlements Systems Act, 2007".

According to the Economic Times, the rules of the Payments and Settlement Systems Act, 2007 are only referring to electronic and online payments. But, experts believe that cash on delivery cannot be held illegal by this. However, there is nothing clear about taking payment through cash on delivery.

In fact, in the RTI, the RBI was asked, "Collect cash from customers of e-commerce companies like Flipkart and Amazon and to distribute it in their merchants, what comes under the Payments Settlements Systems Act, 2007. According to this law, are they in the definition of the payment system and within the scope of the system provider. If yes, then are these authorized under section 8 of the law? Replying to this, the Reserve Bank said that the rules of such transactions have not been fixed and neither have given specific instructions.

Dharmendra Kumar of India FDI Watch had filed an RTI. India FDI is a group of Watch Trade Associations, Union, Group of Peasants and Small Scale Industries. However, according to the lawyers, cash on delivery is not illegal. "The reply of the Reserve Bank does not mean that cash on delivery is illegal or unauthorized.