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ONDC | Open Network For Digital Commerce

What is ONDC?

ONDC stands for Open Network for Digital Commerce. It is part of the Indian government’s digital public infrastructure (DPI) strategy, which aims to disrupt the e-commerce industry and make it more inclusive and open.

What does an open network exactly mean?

Today, most online platforms are closed networks. Assume an e-commerce marketplace for various financial products – called Finance Bazaar.

Finance Bazaar will:

a.     reach out to say Canara Bank, SBI Cards and HDFC Life

b.     pitch them to come aboard and sell their offerings, such as savings accounts, personal loans, credit cards and term plans, to Finance Bazaar’s user base

c.      help create APIs and integrations to list the said products on Finance Bazaar’s app

Now, the Finance Bazaar partnership works very well, and thus, Canara Bank, SBI Cards, and HDFC Life decided to list their products with another online marketplace called Finance Megamart.

However, since the APIs and integrations were tailored to be listed only on Finance Bazaar, they have to replicate the entire effort again for listing on Finance Megamart!

Not only for listing, whenever they have to make any changes, they must replicate the effort twice consistently – and THIS is the pain point ONDC wants to solve!

1.     Any seller can list their products, and any customer-facing app can access these sellers along with their product offerings

2.     This eliminates the dependence on specific platforms, levelling the playing field for all

3.     ONDC establishes common standards for online transactions, from listing to pricing to fulfilment and dispute resolution

What is in it for sellers?

a. Creates instant distribution – all you have to do as a seller of financial services is follow the common standards and make your offerings digitally ready. Any customer-facing apps can then plug you into their user base. E.g., GPay and PhonePe are 2 of India’s top 3 payment apps. Imagine being able to access their several million users immediately!

b.     Generates economies of scale – to do a customised implementation with only one customer-facing app, you may have to pay an upfront integration fee. And incur the cost of your developers. However, if you take the ONDC route, your developer creates the base only once – and it keeps getting reused, thereby generating economies of scale

c.      Creates control – Since you are managing your products’ listing, pricing and fulfilment centrally, you have absolute control over the final product being delivered to the customer

What is in it for customer-facing apps?

a.     Instant supply discovery – A GPay or a PhonePe will no longer have to build out supply for products. A Canara Bank will create its digital savings account offering once, which can be readily accessed and listed by Paytm, Phone Pe or any other customer-facing apps (buyer apps). This saves them a lot of manpower and work effort

b.     Price discovery – Since the pricing is standardized across all platforms, neither parties have to spend time aligning on a price point before listing their products

c. Innovation – Since supply and pricing of supply are solved, they not only save the initial time to market for buyer apps but also make the supply quality more hygienic and less moat. Irrespective of whether you are a GPay or a PhonePe, you have access to the same number of financial service providers. Therefore, the focus now has to be on creating more value to differentiate from one another

Roles in the ONDC ecosystem

There are four kinds of roles you can choose from to participate in the ONDC ecosystem:

1.     Buyer network participant – Any business with a pre-existing base of customers can join ONDC as a buyer network participant.

2.     Seller network participant – A seller network participant connects sellers to the ONDC network through a seller application. They are also responsible for digitizing the seller’s catalogue and dispersing payments. E.g., PhonePe for Business

3.     Gateway – Gateways are technology providers that ensure all sellers in the ONDC network can be discovered. For example, I manage a database of on-street foot agencies with agents for door-to-door document pickup. A savings account customer can choose any agent, depending on whoever fits their preferred time of pick-up best

4.     Technology service providers (TSP) – A standalone software services provider who can help a buyer network participant or a seller network participant create the necessary technology capabilities for being part of ONDC, especially when such capability is not available in-house

Like UPI, ONDC can transform how financial products are discovered and purchased online – through an open protocol based on open-source specifications.

If you are a financial institution or technology service provider evaluating the ONDC opportunity – reach out to us today at


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