Cash on Delivery (CoD) payment option could be illegal

The Cash on Delivery payment method is could be illegal, according to RBI. E-commerce websites are in great fear of massive loss

Cash on Delivery, CoD, the most widely used payment method for various e-commerce websites would be illegal in India. The Reserve Bank of India (RBI) says, “payment intermediaries are not been authorized under Section 8 of the Payments and Settlements Systems Act”.  The Reserve bank of India, in reply of an RTI query, said, “intermediaries include all entities that collect monies from customers for payment to merchants using any electronic/online payment mode.”

The most common payment model used by e-commerce users are most likely to be illegal. The biggest e-commerce websites like Flipkart, Amazon etc are in shock after knowing this news. They are too much worried about their business. As almost 75% of their users prefer Cash on Delivery option for payment.

Dharmendra Kumar, the man who filed the RTI query asked the Reserve Bank of India if Cash on Delivery is permissible for paying the e-commerce merchants according to the section 8 of payment and settlement section Act or not. The Reserve Bank of India replies to the query, “Flipkart and Amazon like marketplaces are not authorized according to the PSS act 2007.”

Now the biggest problem occurs for the e-commerce websites that if RBI makes the Cash on Delivery option illegal, then there would be a great loss of about 30 millions for those e-commerce websites. The Cash on Delivery option in India is the main reason for e-commerce websites to became that famous. Almost half of India’s population recommend CoD for their purchases. CoD is the only reason how e-commerce websites make much capital in India.

The Cash on Delivery payment method is could be illegal, according to RBI. E-commerce websites are in great fear of massive loss.

The PSS act passed in 2007 and is effected from the month of August in 2008. This act takes a look over and regulates all the system of payments in India. This law deals with all the online and electron payments. The question on the later arises because CoD is not mentioned anywhere in this act. Some famous payment experts prefer Cash on Delivery as a legal payment mode. On the other hand, various lawyer and payment experts believe it as the exploitation of the PSS act 2007.

Abhishek Rastogi, a well-known lawyer writes in his newspaper, “The Payment and Settlement Systems Act, 2007 should apply to CoD transactions by e-commerce operators. It (CoD) can be done through a contractual arrangement between e-commerce operators and merchants.  These will be regulated by the Payment and Settlement Systems Act, 2007, rules and regulations framed thereunder.”

Actually, RBI still hadn’t had any clarity about the fact. Cash on Delivery mode of payment is still legal in India. Anyone can easily use it until RBI clarifies the truth about it. Most of the e-commerce websites are totally dependent on CoD and is the only reason for e-commerce portals to grow their root in India.

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