ONDC May Levy Small Fee On Each Transactio: CEO Koshy

ONDC Slashes Network Partner Incentives By More Than 80% Ahead Of The Festive Season

SUMMARY

T Koshy, managing director and chief executive of ONDC, told Business Standard that the quantum of the fee has not been decided yet, however, it is likely to be small and levied on each transaction

While ONDC currently has no revenue model, its costs are low as it does not have a central platform or software that it needs to maintain

This comes at a time when the ONDC has been seeing a rapid traction, clocking a record 89 Lakh transactions in May across retail and ride-hailing segments

Looking to recoup its operating costs, the government-run Open Network for Digital Commerce (ONDC) will likely start levying transaction charges in the current financial year.

T Koshy, managing director and chief executive of ONDC, told Business Standard that the quantum of the fee has not been decided yet, however, it is likely to be small and levied on each transaction.

“We will evaluate the network growth and decide the right time. We have not decided how to structure it,” he said.

While ONDC currently has no revenue model, its costs are low as it does not have a central platform or software that it needs to maintain.

“We are just a Section 8 company performing the role of a digital transformation provider. There is no system or platform that we need to maintain. Thirdly, demand generation is a collaborative effort among the buyer app, seller app, sellers and ONDC. All these keep our costs minimalistic,” Koshy added.

Launched in 2021 under the aegis of the Department for Promotion of Industry and Internal Trade (DPIIT), ONDC is an open protocol-based network to enable local commerce across multiple segments, including grocery and mobility among others.

It aims to democratise ecommerce by providing services at lower costs compared to other online marketplaces.

This comes at a time when the ONDC has been seeing a rapid traction, clocking a record 89 Lakh transactions in May across retail and ride-hailing segments. This was an increase of 23% month-on-month (MoM).

The network comprises over 5.35 Lakh sellers spanning 1,200 cities.

Back in December 2022, Koshy said that ONDC would likely start charging a ‘small fee’ from platforms and the fee will contribute towards the ‘maintenance and development’ of the network.

Meanwhile, startups in the ecommerce ecosystem are lining up to join the ONDC to shore up their business operations. Major companies such as Paytm, Ola, PhonePe, and Shiprocket have joined the ONDC network recently.

Additionally, the likes of Delhivery, Dainik Jagran, Uber, IDFC Bank, Kotak, Dunzo, and Tata Neu have also integrated some of their services with the ONDC.