PROTOCOLS vs PLATFORMS

Yesterday, India’s Open Network for Digital Commerce (ONDC) reported their first ‘multi-domain cascaded round trip transaction ’ as part of the ongoing ONDC Hackathon. While this announcement seems ultra -nerdy, it could dramatically reshape the trajectory of Indian ecommerce. ?

ONDC’s ambition is to disrupt current digital commerce models, unbundling them via the beckn protocol, thus allowing buyers and sellers to transact without being tied to underlying ecommerce platforms. Today, these platforms dominate ecommerce. Could there be an alternate, more democratic, more open model? Rather than being tied to large platforms, could one imagine a set of open protocols that facilitate discovery of sellers and products thus routing demand and fulfilling transactions?

The debate on platforms vs protocols is not new. Mike Masnick wrote his seminal piece on this issue advocating a new approach to free speech – moving to a protocols based approach to social media. He imagined a ‘social network protocol’ along the lines of how SMTP for email works. Anyone could build an app or interface (much like today’s email clients) and provide a differentiated interface and better services. This model seems to have several benefits vis a vis the large social networks today which are yet to prove they can do a good job at moderating public debate or protecting consumer data privacy.

Closer home, one could argue that UPI has leveraged open protocols and API’s to disrupt digital payments in India. Over the last few years UPI usage has grown exponentially, opening up new ways for Indian consumers to send and receive money while largely bypassing the big banks and platforms who have over decades strengthened their stronghold over the payments ecosystem. While one could debate the presence of a ‘central’ organizing state aligned institution like NPCI entering this ecosystem there is little doubt that an open protocols approach has enabled this revolution.

We debated the platforms and protocols issue (and many more topics!) at the EY Convene Digital Roundtable, a few days ago. Dr Pramod Varma hosted the session and with his inimitable passion and depth of technical knowledge he walked us through the vision for India’s Digital Architecture including the key use cases that ONDC and beckn.org will enable.?

ONDC wants to build this alternate model. There is no doubt a long way to go. What happened yesterday at the ONDC hackathon proves that we have the technology to enable round trip transactions across domains. A lot has to be done in terms of standardization, ecosystem evolution and consumer adoption. But the promise is immense. And one can see the making of yet another giant Indian national digital platform.

Are we getting closer to a UPI moment for Indian ecommerce?

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