RBI says cash-on-delivery illegal, could be a problem for Amazon, Flipkart and those who shop online.
Cash-on-delivery, a payment option widely used in India and offered by almost every leading e-commerce companies including Amazon and Flipkart, is most likely illegal. Reserve Bank of India, in a response to an RTI, has noted that collection of money by e-commerce companies like Flipkart and Amazon is not permissible, although it is also not yet explicitly illegal.
Dharmendra Kumar, who filed the RTI query, told the newspaper that there lies a grey area in this regard and the central bank needs to put a certain mechanism in place so that e-commerce firms don't exploit ambiguity in the regulations.
The CoD, the idea brought into e-commerce marketplace by home-grown e-commerce giant Flipkart, accounts for almost half the online purchases in the country and is also one of the reasons why e-commerce has gained currency in India.
India’s online retailing business is estimated to grow by more than 1,200% to $200 billion by 2026, up from $15 billion in 2016, according to a Morgan Stanley report last year. It estimates online retail to account for 12% of the country’s retail market by then, up from just 2%. Amazon has committed at least $5.5 billion to take on Flipkart.
Walmart recently announced plans to buy a 77% stake in Flipkart for $16 billion, making it the world’s largest acquisition of any ecommerce company ..
Basically, RBI has given no clarity on this issue. The act has no explicit mention of CoD which creates the confusion on whether the payment mode is legal or illegal. There are many online shoppers in India who depend solely on the CoD for purchases made from Flipkart or Amazon.
Cash-on-delivery, a payment option widely used in India and offered by almost every leading e-commerce companies including Amazon and Flipkart, is most likely illegal. Reserve Bank of India, in a response to an RTI, has noted that collection of money by e-commerce companies like Flipkart and Amazon is not permissible, although it is also not yet explicitly illegal.
Dharmendra Kumar, who filed the RTI query, told the newspaper that there lies a grey area in this regard and the central bank needs to put a certain mechanism in place so that e-commerce firms don't exploit ambiguity in the regulations.
The CoD, the idea brought into e-commerce marketplace by home-grown e-commerce giant Flipkart, accounts for almost half the online purchases in the country and is also one of the reasons why e-commerce has gained currency in India.
India’s online retailing business is estimated to grow by more than 1,200% to $200 billion by 2026, up from $15 billion in 2016, according to a Morgan Stanley report last year. It estimates online retail to account for 12% of the country’s retail market by then, up from just 2%. Amazon has committed at least $5.5 billion to take on Flipkart.
Walmart recently announced plans to buy a 77% stake in Flipkart for $16 billion, making it the world’s largest acquisition of any ecommerce company ..
Basically, RBI has given no clarity on this issue. The act has no explicit mention of CoD which creates the confusion on whether the payment mode is legal or illegal. There are many online shoppers in India who depend solely on the CoD for purchases made from Flipkart or Amazon.
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