RBI Orders Ecommerce Players To Settle Seller Payments Within Two Days

In response to the All India Online Vendors Association’s recent complaint regarding late payments by ecommerce companies, the Reserve Bank of India has ordered online marketplaces to follow the 2009 guidelines pertaining to the settlement of payments for electronic transactions involving intermediaries.

As per reports, the country’s central banking institution has mandated ecommerce players to clear seller payments within two days from the date of intimation of the completion of transaction.

The development comes after the AIOVA submitted a complaint with the RBI in August, alleging that ecommerce platforms like Flipkart, Amazon and Paytm often delayed payments to sellers by several days.

Currently, etailers charge a specific payment collection fee from online vendors for online payments as well as cash on delivery orders.

In the complaint, the AIOVA further stated that remittances by these ecommerce players took more than 15 days to complete. Moreover, the money being transferred was not being done through escrow accounts, the vendors’ body alleged.

The complaint dated August 24 read as follows, “We would like to point out that our association has received numerous cases where money has been held by marketplaces for an indefinite period due to various reasons.”

In an effort to reach a resolution, the RBI said last week, “All payments to merchants which do not involve transfer of funds to nodal banks shall be effected within a maximum of T+2 settlement cycle.”

As per the RBI’s instructions, payments to merchants involving nodal banks will need to be settled within a maximum of three days from the date of intimation. The banking body has also instructed the AIOVA to bring specific cases of violations to its notice for further evaluation of the situation.

Flipkart and Amazon, however, have denied such allegations. According to a Flipkart spokesperson, payments on its platform are currently dependent on the dispatch timeline. Payouts are usually settled within seven to 15 days post dispatch.

Amazon, on the other hand, said that it already follows the 2009 RBI guidelines of T+3 payment settlement cycles for online sellers.

The AIOVA has been unusually busy these past few months. Right from intervening in the AskMe shutdown saga, to reaching out to Minister of Commerce and Industry Nirmala Sitharaman in the Snapdeal vendor issue, the AIOVA has been at the forefront of ensuring online vendors and sellers get adequate representation.

In March 2017, it also wrote to the Competition Commission of India (CCI) about Flipkart and Amazon’s predatory price practices that are adversely affecting the sellers. And most recently, it even intervened on the online vendors’ behalf in the middle of the Flipkart-Snapdeal merger.

Most recently, in July, the vendors’ association issued a trade advisory notice to Flipkart sellers when a technical malfunction caused the ecommerce marketplace to record wrong weights for shipments. As per reports, the financial impact of the problem ranged between 20% and 30% of a vendor’s gross merchandise volume (GMV).

The latest mandate from the RBI is aimed at protecting the interest of sellers in case of late payments by ecommerce companies.

(The development was reported by ET)