After noisy foray into food, ONDC marks fintech push with blueprint of credit, gift card purchases

Through ONDC, the government hopes to increase e-commerce penetration in the country to 25 percent in the next two years, reaching 900 million buyers and 1.2 million sellers

In a move that shows the vast scope of its e-commerce ambitions from food to fintech, Open Network for Digital Commerce (ONDC) has for the first time released a blueprint of how financial services could be sold on the government-backed interoperable network.

This comes months after its foray into food and grocery deliveries with large incentives ruffled the hyperlocal commerce sector, and invited criticism for trying to disrupt incumbents with discounts.

The draft specifications for financial services, released on developer platform GitHub, are attached with a memo saying that ONDC is looking to build a nationwide network  for the sector, support innovation and bring on board policymaking authorities, among other things.

ONDC is seeking feedback from participants such as banks, NBFCs, buyer and seller apps for the design of the protocol for purchases of financial products like gift cards, personal loans and invoice-based credit on the network. These specifications will be finalised within the next two or three weeks on the basis of feedback, sources told Moneycontrol.

"Post the finalisation of specs, NPs (network participants) will decide whether they want to join the network to provide financial services or not. Those who decide in favour of joining may take another month or so to integrate with the protocol," a source said.

According to ONDC's website, the government-backed interoperable network aims to bring on board FastTag and insurance products apart from gift cards and credit instruments.

ONDC did not respond to Moneycontrol's queries.

Also read: Understanding ONDC, the open network billed to be the UPI of e-commerce

The memo that appears below the specs on the GitHub page said, "ONDC financial services aim to build a nationwide multi-modal network that provides seamless experiences, supports growth & innovation by bringing together a diverse set of financial services players who can engage with the open network on their own terms, fostering collaboration, sharing & new models, facilitating responsive policy by bringing onboard decision making authorities."

The intent is to enable seamless and interoperable service options by bringing in diverse inventory onboard at scale, it added.

For this, all financial services apps on the network will have to be built in such a way that they can communicate with each other in the same language.

As of now, seven broad categories of products are available on ONDC — food & beverages,  grocery, home & kitchen products, mobility, electronics, fashion and beauty & personal care. In the future, ONDC also plans to bring on educational services and home services to the network.

Battling platform dominance

Despite no special marketing efforts outside the top few metros like Bengaluru and Delhi, users from 620 cities have placed orders on ONDC, Moneycontrol reported earlier. The government-backed ecommerce network is now planning to double down on Tier 2 and beyond in the next iteration of its incentive scheme, which may be released this week.

With promotional campaigns by network participants such as Paytm, PhonePe's Pincode, and Magicpin, ONDC has been able to ramp up to more than 1.1 million retail transactions (food, grocery, apparel, etc.) and 5.4 million mobility transactions since its inception. The spike in mobility has come from the Juspay-backed Namma Yatri app, which aggregates auto rickshaws without charging any fees to drivers in Bengaluru.

On the retail side, 54,500 merchants have joined ONDC, offering about 75 lakh stock-keeping units (SKUs). In the past few months, they have averaged 16,000 orders per day, with a peak of 35,000 orders cumulatively last month.

Backed by the government, ONDC seeks to prevent the dominance of a few large platforms, such as Amazon, Flipkart, Swiggy, and Zomato, in the e-commerce and food delivery sectors.

Through ONDC, the government hopes to increase e-commerce penetration in the country to 25 percent in the next two years, reaching 900 million buyers and 1.2 million sellers through the network. It is projected to generate a gross merchandise value of $48 billion.

ONDC is banking on three key pillars to reduce the cost of doing business for everyone, including retailers: dynamic pricing, inventory management, and delivery cost optimisation.