RBI says cash-on-delivery is not `authorised' payment model
26 July 2018
Cash-on-delivery is not an authorised system of payment although most e-commerce companies, including majors like Flipkart and Amazon, use it as a payment option, Reserve Bank of India (RBI) has clarified.
Reports citing an RTI clarification said that collection of money on delivery of goods widely used by e-commerce companies is not authorised, although not illegal as such.
The RBI clarification comes on an RTI query filed by Dharmendra Kumar of India FDI Watch as to whether the cash-on-delivery (CoD) and disbursement of money to e-commerce merchants by e-commerce marketplaces such as Flipkart and Amazon comply with Section 8 of the Payments and Settlements Systems Act, 2007.
The RBI is reported to have said that the "aggregators/payment intermediaries like Amazon and Flipkart are not authorised under Section 8 of the PSS (Payments and Settlements Systems) Act, 2007."
But, if the central bank makes CoD transactions illegal, it would badly hurt e-commerce transactions in India and kill the over $30 billion e-commerce sector.
The Payments and Settlements Systems Act 2007 makes no clear mention of the CoD payment model.
However, legal experts are of the view that there is nothing illegal in the CoD payment system.