Cash-on delivery (CoD) is the most popularly used payment method on e-commerce service providers like Amazon and Flipkart. It accounts for almost half of the purchases on these platforms in the country. However, now a new report suggests that the CoD payment method was not authorized by Reserve Bank of India (RBI) for the e-commerce sector. Also Read - Moto G 5G price drops from January 20 in Flipkart Big Saving Days saleAlso Read - Today's Tech News: Samsung Galaxy S20 price cut, Signal ramps up hiring
The Economic Times quoted RBI s response to an RTI query stating, Aggregators/payment intermediaries like Amazon and Flipkart are not authorized under Section 8 of the PSS (Payments and Settlements Systems) Act, 2007. Given the huge volume of such transactions, the statement serves as a blow to the entire industry. Along with the two e-retailers mentioned, it also affects other players in the market who collect cash from customers on behalf of third-party vendors at the time of delivering goods. Also Read - Flipkart announces Big Saving Days sale, begins on January 20
However, there are some legal experts who are of the opinion that the 2007 Act doesn t necessarily invalidate CoD transactions. They are claiming it to mention electronic and online payment, but money received through the cash-on-delivery route haven t been mentioned explicitly.
This by no means makes the cash-on-delivery model illegal or unauthorized, Abhishek A Rastogi, partner at Khaitan & Co was quoted by ET. The Payment and Settlement Systems Act, 2007 should apply to cash-on-delivery transactions by e-commerce operators.
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While some lawyers stated potential for punishment against the Act s norms, Rastogi claims that CoD can be carried out with an arrangement between e-commerce operator and the merchant. These could be further regulated under the Payment and Settlement Systems Act, 2007.