The government-backed Online Network for Digital Commerce (ONDC) has reduced its incentive payout for December to around Rs 40 lakh, marking a 33 percent drop from Rs 60 lakh it offered during the peak festive season in October, sources told Moneycontrol. The ONDC’s shift to reducing incentives is aimed at conserving cash.
The ONDC has been giving financial incentives to network players depending on order volumes and categories. This money is in turn used to fund discounts and offers for customers to promote rapid adoption of the government-backed network.
“The monthly limit for the cumulative (across all programmes) financial assistance requested by any network participant will be Rs 40,00,000 for December 2024,” an ONDC memo said. It added that for network participants that have crossed an average of 1 million orders per month from August to October, the monthly limit for cumulative financial assistance will be capped at Rs 30,00,000.
In November, the ONDC recorded a transaction volume of 14.4 million as against 14 million orders in October. Out of the 14.4 million orders, mobility contributed to around 6.2 million and non-mobility around 8.2 million.
Also Read: ONDC records 14 mn transactions in Oct, marks 7.6% rise during festive season
ONDC’s efforts to cut costs
In a strategic move, the ONDC announced a hike in its incentive payout by 50 percent to each network player in October to Rs 60 lakh. While on a month-on-month basis, the incentive went up, compared to the August incentive payout, there was still a reduction of nearly 76 percent from Rs 2.5 crore.
This also attributed to a jump in October transactions. The ONDC recorded a 7.6 percent rise to 14 million transactions in October, compared to 12.90 million in the previous month.
The move to increase the incentive payout also comes after the network recorded a slightly slower growth of 5 percent month-on-month in transactions in August to 12.58 million, compared to a 21 percent surge in July.
However, on a long-term basis, the ONDC will be reducing their incentive payout to players.
The network has also announced levying a fee of Rs 1.5 on every transaction above Rs 250 from January 1. This comes six months after chief executive T Koshy indicated plans to introduce transaction charges to recoup operating costs.
Also Read: ONDC contemplates user charges amid rapid expansion: Report
The ONDC operates without a revenue model, keeping costs low by focusing solely on digital infrastructure provision. It functions akin to a utility service, comparable to the Unified Payments Interface (UPI), where operational costs are inevitable and must be managed.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
