ONDC to Implement Transaction Fees for Sustained Operations and Growth

ONDC to Introduce Transaction Fees to Sustain Growth and Operations

In a significant move aimed at ensuring its sustainability, the Open Network for Digital Commerce (ONDC), a pioneering initiative by the Department for Promotion of Industry and Internal Trade (DPIIT) since 2021, is set to introduce transaction charges. This decision, as revealed by T Koshy, CEO of ONDC, in a conversation with Business Standard, marks a new phase in the network’s operational strategy, focusing on covering its operating expenses through a minimal transaction fee on each transaction processed within the network.

While the exact fee structure is still under deliberation, Koshy’s assurance of its minimal impact reflects ONDC’s commitment to maintaining an affordable and efficient ecosystem for digital commerce. "The introduction of transaction fees is a strategic move to ensure the long-term sustainability and growth of the network. We are carefully evaluating the network’s growth to decide on the optimal timing and structure for these charges," Koshy stated, highlighting the organization’s cautious approach to this significant transition.

ONDC’s operational model stands out for its cost-effectiveness, operating as a Section 8 company with a focus on digital transformation and collaboration among stakeholders rather than maintaining extensive infrastructure. This approach has allowed ONDC to keep its operational costs low, facilitating a more inclusive and diverse ecommerce environment. "Our role is more of a digital transformation facilitator, which enables us to operate with minimal infrastructure costs," Koshy added, emphasizing the network’s unique position in the digital commerce sector.

The network has shown impressive growth, with recent data indicating that ONDC processed a record 89 lakh transactions in May, a 23% increase from the previous month. With over 5.35 lakh sellers across 1,200 cities, ONDC’s expanding footprint is a testament to its growing adoption and impact in the market.

Looking forward, ONDC is poised to further enhance its ecosystem by attracting more ecommerce players. The recent inclusion of industry giants such as Paytm, Ola, PhonePe, and Shiprocket into the network underscores its appeal and strategic importance in the evolving digital commerce landscape.

As ONDC gears up to introduce transaction fees, the move is seen as a pivotal step towards ensuring the network’s sustainability and continued growth. With its innovative operational model and focus on digital transformation, ONDC is set to further democratize ecommerce services, making them accessible to a wider range of sectors and stakeholders across the country.