Cash-on-delivery deals not authorized, says RBI


It seems that the payment method that is the COD (Cash on delivery) which we all see on platforms like Amazon and Flipkart may not be authorized according to the RBI (Reserve Bank of India) as reported to RTI. This is as per the report in The Economic Times.

As per the report, it seems that the RBI has made a response to the RTI enquiry stating that there are a few payment methods available in sites like Flipkart and Amazon which are actually not authorized.

Under Section 8 of the PSS which is Payment and settlement systems, the aggregators and payment mediators like Flipkart and Amazon are not authorized. Well, this is what has been responded by the top bank when an enquiry was made by Dharmendra Kumar, FDI Watch.

The RTI inquiry requested that the RBI affirms if the payment method like cash on delivery accumulation and payment to web-based business dealers or commercial centers, for example, Flipkart and Amazon are approved under the Payments and Settlements Systems Act, 2007.

This Act, however, does mention that the online and electronic payment is valid, but it doesn’t tell anything about the COD method and whether it’s valid or not. RBI has also not provided any specific guidelines in this regard as well.

The cash on delivery payment option which is provided almost every e-commerce platform like Amazon, Flipkart, and more basically takes cash or money from the customers and a third-party vendor collects the money while delivering the goods. However, the legal specialist has commented that this particular rule of collection money, however, doesn’t discredit this payment option.

According to Abhishek A Rastogi, Khaitan & Co, this payment method, that is COD isn’t by any means unauthorized or illegal. He also said that PSS, 2007 should include cash on delivery payment method as well. He, however, did mention that those who are collecting money through COD without RBI discretion should be considered as unauthorized.

Many experts speculate that because of COD payment options, the e-commerce in India is gaining a solid foothold.

As per Morgan Stanley, the online retail business in India will grow more than 1200 % to 200 billion by the end of 2026. Simply the online retail industry will cover 12 % of India’s retail market.

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