The All India Online Vendors’ Association (AIOVA), a strong and powerful lobby of 30,000-odd online sellers, will write to the RBI, seeking clarity on the Cash on Delivery (CoD) model, the preferred mode of payment among Indian online shoppers.

AIOVA’s decision to officially approach the central bank follows a reply from the RBI to a RTI query on the legality of the CoD model used by e-commerce players, especially online marketplaces such as Amazon and Flipkart.

‘Grey area’

Responding to the RTI query, the RBI said that CoD falls in a “grey area” of the Payments and Settlements Systems (PSS) Act, 2007. “Aggregators/payment intermediaries like Amazon and Flipkart are not authorised under Section 8 of the PSS (Payments and Settlements Systems) Act, 2007,” it added.

The RTI was filed by Dharmendra Kumar from India FDI Watch, an organization of small traders and farmers, specifically asking whether CoD model is approved by PSS Act, 2007.

Plea for clarity

“We will soon write to the RBI. Our point is that rules should be followed. The RBI should clear the ambiguity,” said an office-bearer of AIOVA, requesting anonymity.

He said that clarity will help thousands of sellers from being “exploited” by the large marketplaces like Amazon and Flipkart over payment issues. The body has alleged that the marketplaces hold back payments of merchants and majority of these payments come through CoD and the sellers are clueless as to whom to approach over such issues.

Expert view

Abhishek A Rastogi, partner at Khaitan & Co, said, “It cannot be said that collection of cash by e-commerce operators is unauthorised. It can be done through a contractual arrangement between e-commerce operators and merchants. These will be regulated by the Payment and Settlement Systems Act, 2007, rules and regulations framed thereunder. However, reference to online modes of payment no doubt indicates that the government wants to promote and encourage this mode of transaction more than any other mode.”

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