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RBI says cash-on-delivery illegal

Cash-on-delivery (CoD) is a payment option that is widely used in India.  It is offered by almost every leading e-commerce companies including Amazon and Flipkart, is most likely illegal. According to media reports, Reserve Bank of India, in a response to an RTI, has noted that collection of money by e-commerce companies like Flipkart and Amazon is not permissible, although it is also not yet explicitly illegal.

The reports said that the RTI query filed by Dharmendra Kumar of India FDI was asked RBI to confirm if the CoD payment option and disbursement of money to e-commerce merchants by e-commerce marketplaces such as Flipkart and Amazon comply with the Section 8 of the Payments and Settlements Systems Act, 2007 or not.

The bank replied to the query saying that the “aggregators/payment intermediaries like Amazon and Flipkart are not authorised under Section 8 of the PSS (Payments and Settlements Systems) Act, 2007.” Note that the majority of e-commerce transactions in India are done via CoD payment mode and if RBI explicitly makes the model illegal this could affect the e-commerce sector in India worth more than 30 billion.

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