An overview on Nodal Accounts
Mohit Uppal - Head Of Partnerships
Airports Partnerships | Strategic Alliances | Growth Hacker | Business Growth Partner | Alliance Management | Growth Strategist | Expert in Cross-Industry Partnerships and Innovation | GMR Airports
If you are a start-up, fintech, payment intermediary or a market place, Nodal Account service will help you to smoothen your banking operations.
According to the Reserve Bank of India (RBI) guidelines, nodal accounts are mandatory for e-commerce websites. An online seller receiving money on behalf of the actual merchant must credit the same in these accounts. The RBI does not allow e-commerce websites to combine their sales proceeds with those received on behalf of other merchants.
This is because in case the actual merchant fails to deliver the products as per the customer preference, the e-commerce website is able to use the funds held in these accounts to refund the money. Furthermore, such types of accounts are required for e-wallets and payment service companies. The RBI guidelines state that all companies that hold money on behalf of third parties must maintain such accounts with a bank
In Simple terms Nodal Accounts are Bank Accounts created to hold 3rd party amount for settlement. Below is the sample scenario to understand it in a better way
Scenario: The scenario has 4 entities :
· Buyer : Any retail customer
· Seller : Brands like Arrmani, Louis Phhilippe etc.
· Intermediary ( Ecommerce Websites, Aggregator)
· Bank : Bank
A customer XYZ(Buyer) purchases a t-shirt from Ecommerce Webiste (Intermediary) of a brand Arrmani (Seller). Invoice is generated on the Ecommerce Webiste(Intermediary) and the customer makes the payment of Rs. 2000. Rs. 2000 is placed in the Nodal Account opened by Ecommerce Webiste with Bank. It belongs to Arrmani (Seller) and Ecommerce Webiste (Intermediary) will transfer the money only when the T-shirt is delivered to the customer XYZ.Once the T-shirt is delivered to XYZ (Buyer), Ecommerce Webiste(Intermediary) transfer it’s margin which is 15% of Rs.2000 i.e. Rs. 300 to is transferred to Current Account with bank. Balance Rs. 1700 is transferred to Arrmani(Seller)
There has to be an agreement between the Buyer and Seller for Nodal Account to come into picture and also the Ecommerce Webiste (Intermediary) cannot use this account for its operation purpose.
-----------------------------------------RBI NOTIFICATION------------------------------------------
"Nodal Account" means an account held by <Ecommerce, eWallets or Payment Services> with any of the banks for the purpose of pooling the monies collected from all the Sellers and facilitating the subsequent payouts to the Seller, pursuant to RBI notification DPSS.CO.PD.No.1102/ 02.14.08/2009-10, dated 24/11/2009. The nodal bank account will not be operated by <Ecommerce, eWallets or Payment Services> and the payments will be strictly distributed to the Seller from this Nodal Account operated by the nodal bank.
1. Settlement:
i. All payments to merchants which do not involve transfer of funds to nodal banks shall be effected within a maximum of T+2 settlement cycle (where T is defined as the day of intimation regarding the completion of transaction).
ii. All payments to merchants involving nodal banks shall be effected within a maximum of T+3 settlement cycle.
2. Credits: Transfers from other banks as per pre-determined agreement into the account, if this account is the nodal bank account for the intermediary.
3. Debits: Transfers to other banks as per pre-determined agreement into the account, if that account is the nodal bank account for the intermediary.
For online marketplaces, to ensure faster settlement of payment from customers to the sellers and to reduce the risk of default by the intermediary (which is the online marketplace), RBI has mandated that the intermediary should settle/pay to the seller, the money received from customers within T+2 days. The “T” here is defined as the day on which the intimation is given to the seller that the goods has been delivered. This means that if you receive the money today, the seller dispatches and goods get delivered on the day T, you would have to pay the seller within T+2 days. You would need to open a nodal bank account with any of the banks and your nodal bank has to ensure payment is released to seller within T+2. There would be concurrent audits of your account and you would need to furnish details of your transactions to RBI.
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Automation Test Lead
4 年Hi Mohìt Uppál ?? Do you know which bank in India provides this gateway service to purchase? I could not find any info online.
SVP Finance India & Global FP&A at Urban Company | ex- Shopclues, Accuracy, PWC
5 年Isn't Nodal account only applicable to Payment gateways. There is a specific exclusion given in the RBI circular in the definition of intermediary for e commerce operators. "2.1 Intermediaries: Intermediaries would include all entities that collect monies received from customers for payment to merchants using any electronic/online payment mode, for goods and services availed by them and subsequently facilitate the transfer of these monies to the merchants in final settlement of the obligations of the paying customers. Explanation: For the purpose of these directions, all intermediaries who facilitate delivery of goods/services immediately/simultaneously (e.g. Travel tickets/movie tickets etc) on the completion of payment by the customer shall not fall within the definition of the expression “intermediaries”. These transactions which are akin to a Delivery versus Payment (DvP) arrangement will continue to be facilitated as per the contracts between the merchants and the intermediaries as hitherto and banks shall satisfy themselves that such intermediaries do not fall within the definition of the “intermediaries” when they open accounts other than internal accounts."