Cash-on-delivery in e-commerce falls under grey area, RTI query reveals


The cash-on-delivery (CoD) model, used by all major e-commerce giants, falls under a grey area when it comes to provisions. The Reserve Bank of India, while responding to a RTI query stated that there is no provision for cash-on-delivery when it comes to e-tailers under Section 8 of the Payments and Settlements System Act, 2007.

Close to 50% of all ecommerce transactions are cash-on-delivery.

As per a report by News18, this is a grey area with regards to cash-on-delivery rules. The RBI, however, hasn’t issued any instruction concerning the same.

This is in response to an RTI application filed by Mr. Dharmendra Kumar, wherein he had a query if CoD payments fall under the ambit of the Payments and Settlements Systems Act of 2007.

The Act has provisions for online and electronic payment but does not mention payments through CoD.

A report by Economic Times stated that experts are of the opinion that this grey area does not mean that cash-on-delivery is illegal.

Under CoD, courier agents employed by e-commerce companies collect the money. The e-commerce companies, then transfer the money collected to sellers thereby making the process lengthy and time consuming.

The cash-on-delivery option is extremely popular in the county, with it accounting for almost half of all ecommerce deals. The online retail business which was valued at $15 billion as of 2016, is expected to be valued at $200 billion by the year 2026.

Sources: News18,  Business Today, MoneyControl, IndiaToday

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