Customer Redressal May Be The Thorn In ONDCs Side

A few months back, customers who ordered food via the Open Network for Digital Commerce using Paytm possibly had the most jolting experience. While customer grievance redressal via a ‘help’ or similar option on Zomato or Swiggy is a go-to in times of need, ONDC did not provide any such option.

The customers were left with two choices – write to an email address or go to the buyer app (Paytm, in this case) and seek help. Here, they did both, only to end up with no resolution either way, for the wrongly delivered food order.

But they didn't hesitate to voice this concern on social media platform X, and also tagged the Department of Commerce under the Ministry of Commerce and Industry.

An initiative of the Department for Promotion of Industry and Internal Trade under the Ministry of Commerce and Industry, ONDC is a network based on open protocol, aimed at promoting it for all aspects of exchange of goods and services over digital networks.

In December 2023, the transactions (on a monthly basis) made via ONDC touched a new high of 5 million, compared to about 2,000 transactions in January 2023, according to a person in the know. The number of merchants onboarded crossed 2.5 lakh, with behemoths like Hindustan Unilever Ltd. and Meta Platforms Inc. willing to participate in the government-backed network.

Speaking at a summit organised by Deloitte in December, Consumer Affairs Secretary Rohit Kumar Singh asked ONDC to resolve the issue relating to 'liability'. Highlighting that it is important for customers to get satisfactory services, he said that ONDC had to work on fixing liability in case a consumer does not get the right product.

“I hope ONDC becomes a success, but in the law where does ONDC fit in? It is neither the seller, nor the buyer. But if I am buying through the app...if something goes wrong, there are five parts of the chain (in ONDC supply chain), then who is liable," Singh said.

A 1% error rate in operationally driven businesses is very common, according to Rahul Mathur, associate director at InsuranceDekho. It's not as big a problem as it is being shown but yes, if the platform continues to grow, customer complaints will also go up and they will need a proper system in place, he told NDTV Profit.

Resolution At ONDC – Work In Progress

ONDC is working on setting up an Online Dispute Resolution system, which the customers can approach in case they are seeking resolution, according to two people in the know who spoke on the condition of anonymity. The ODR would be responsible for making a fact-based judgment, after assessing the nature of complaint, buyer, seller and other metrics involved.

So far, ONDC has onboarded seven ODR service providers, which will go live on the platform soon, the first of the two people quoted above said. They would be independent, track an order trail digitally and give solutions by identifying who is at fault in a case.

In an emailed response to NDTV Profit's queries, ONDC said that the ODR is for any complainants which are not satisfied with the resolution provided by a merchant and/or network participants.

"...a consumer can choose to enter into mediation, conciliation or arbitration to resolve the dispute. This option is provided as an alternative to consumer courts. The ODR service providers in the network are empanelled by ONDC," the statement said.

In addition, ONDC has also set up a framework to protect funds of parties involved, the statement said.

Under this, every network participant which collects payment from a customer is required to hold those funds in a special purpose account called an NP account. It is operated like a regular current account, ONDC said. And the actual settlements are executed by a Reserve Bank of India authorised settlement agency, it said.

"This entire framework operates through standardised APIs, which ensures smooth, secure, and timely payouts and settlements," ONDC said in response to NDTV Profit's queries.

But providing an ODR system may not be the only solution. Market participants highlighted lack of trust, among other reasons, for the platform's slow take-off.

Defining Liability – A Miss

According to the Consumer Protection Act of 2019, product liability lies with the seller-on-record and not the platform, the first person quoted above said. ONDC is working exactly like these rules suggest and is giving everyone the option of going to an ODR, he said.

ONDC agrees.

"It has to be understood that the protection afforded to consumers and businesses on the ONDC Network is the same as outside the network," it said.

However the lack of clarity, especially to network participants, may be an issue.

In addition to the existing laws, participants are also governed by the ONDC network policies and digital transaction contracts between network participants, ONDC said in its statement.

But apart from having a redressal mechanism, it is important for ONDC, as an ecosystem, to define some basic standards or requirements for a buyer app or seller app, according to Mohit Rana, partner at Redseer Strategy Consultants.

Mathur agrees. The network participant agreement is unclear on what the limit of liability is, he said.

"Right now, the consumer redressal is being done on a P2P basis, that is, Buyer App and Seller App agreement, as per what is considered as the acceptable industry norms," Mathur said. "However, what the e-commerce industry is looking forward to from ONDC is a 'standard' for redressal, that is, to execute a peer-to-network (P2N) liability contract."

Lack Of Trust

Even as ONDC rides on inflated expectations and takes steps to solve material problems, a lack of trust for the platform prevails.

"When ONDC was launched, a very high target was set and it was believed to be the game-changer...I don't think it's the right thing to do as there are many things one needs to consider," according to Dilip Vamanan, co-founder of SellerApp. "After all, it's not an easy system, we have bigger players," he said.

E-commerce business is mostly about trust and scale, according to Mathur.

"I do think that right now, in the electronics and fashion and apparel segment; trust and inability to understand ONDC are the two factors holding the platform back," he said.

But with the ecosystem maturing and enough buyers and sellers in place, people understand e-commerce.

Even if ONDC says that it wants to bring in more sellers and disrupt the oligopoly, the challenge lies with the customers, as they don't want to move, according to the second person quoted above, who spoke on the condition of anonymity.

The story has been updated with ONDC's official responses.