Open Network for Digital Commerce (ONDC) is an initiative aiming at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks. ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.
ONDC, a UPI-type protocol, is a set of standards for voluntary adoption by sellers or logistics providers or payment gateways. It is a market and community-led network that aims to create an open, inclusive and competitive marketplace. Still at a nascent stage, it is being pitched as a solution to break the dominance of large e-commerce firms like Flipkart, Amazon and others in India. The network aims to democratise ecommerce by putting more kiranas and unorganized retailers online.
ONDC is being pitched as a non-profit e-commerce network that will display products and services from all participating e-commerce platforms in search results. For example, if both Amazon and Flipkart integrate their platforms with ONDC, a user searching for a Bluetooth headset on Amazon would also see results from Flipkart on the Amazon app. Set up as a non-profit company, ONDC would let sellers voluntarily display their products and services across all participating apps and platforms. Since this network uses open specifications
and protocols, and is not tied down to any platform, it does not require buyers and sellers to use the same platform to complete a transaction. So long as the platforms are connected to this open network, buyers and sellers can transact, irrespective of the applications they use.
9 banks have picked up stakes in the ONDC network. SBI, BOB, PNB, Kotak Mahindra Bank, Axis Bank, HDFC Bank, IDFC First Bank and ICICI Bank own a 6.35% stake each in the network, while UCO Bank has picked up 3.17%. SIDBI and NABARD also own a 6.35% stake each.
National Payments Corporation of India (NPCI) has evinced interest in developing the payment and settlement architecture of the ONDC network. However, the RBI has raised concerns over its plans to buy a 10% stake in ONDC over a potential conflict of interest.
As NPCI wants to develop payments and settlement system for ONDC, RBI feels that if it acquires a stake in ONDC, then it will cease to be a neutral party. The RBI has sought more time to study the proposal.
ONDC is expected to make e-Commerce more inclusive and accessible for consumers. Consumers can potentially discover any seller, product or service by using any compatible application or platform, thus increasing freedom of choice for consumers. It will enable the consumers to match demand with the nearest available supply. This would also give consumers the liberty to choose their preferred local businesses. Thus,
ONDC would standardize operations, promote inclusion of local suppliers, drive efficiencies in logistics and lead to enhancement of value for consumers.