ONDC Seeks Public Input On Building Trust In The Network

The Open Network for Digital Commerce has posed 24 questions for public comment about building trust in and around the government-backed e-commerce network.

The questions were released in a consultation paper by ONDC—touted to be the UPI of e-commerce—last week, and dealt with issues surrounding buyer and seller trust in payments, fulfillments, refunds and cancellations operating on the network.

Launched as an alternative to privately run e-commerce platforms, ONDC opened to the public in Bengaluru on Sept. 30 as part of its beta rollout.

The paper highlighted that while the role of private e-commerce firms as middlemen typically engenders transactional trust among buyers and sellers on such platforms, for ONDC that role is performed by the network’s policies and a digital contract called the “transaction-level contract”.

Instead of entering into an overall contractual relationship with the e-commerce platform, buyer and seller side apps on ONDC enter into fresh contracts for each transaction. “The contract is a purely digital artefact that is executed through the ONDC protocol and forms a binding agreement between the buyer side and seller side apps with respect to one single transaction,” the consultation paper said.

The 24 questions enlisted in the paper raised queries around issues like:

1. How can search and discovery for buyers and sellers be made more fair?

2. How can ONDC encourage better catalogue management among sellers?

3. What, if any, are the risks of allowing reconciliation service providers and settlement agencies to participate in the payments and settlement process?

4. To what degree of detail should buyer apps be required to publish their listing prioritisation algorithms?

Besides, raising queries about how to build trust among participants, the paper outlined some of the steps the ONDC has taken. Policies that govern the network, protocol specifications, and transaction-level contracts were enlisted as the three levers that ONDC uses to maintain compliance on the network.

Among the platform’s rules is also a requirement that all downstream payments, as per the agreed settlement terms, be performed within 24 hours of the settlement event being triggered. “The solution that has worked so far is for the central platform to control every aspect of the value chain and become the central store of trust,” the paper said. But potential competition issues and high entry barriers are among the issues with the current model, it said.

Touting interoperability, decentralisation, and unbundling of the value chain as the paradigm shifts that ONDC hopes to usher, the paper highlighted its approach to reorganising contractual relationships in e-commerce.

State Bank of India, HDFC Bank, National Payments Corporation of India and ICICI Bank are among the investors that have picked up a stake in ONDC.