What ONDC Means for Financial Services Players?

Curious about the buzz around "ONDC" in India's digital economy? Let’s dive into what ONDC is and why it matters.

ONDC, or Open Network for Digital Commerce, is set to transform the future of e-commerce in India. Whether you're a business owner, tech enthusiast, or simply interested in emerging trends, understanding ONDC could be crucial for navigating the changes ahead.

This blog explains what is ONDC, explores its financial services, and provides a quick overview of how ONDC works, and how you can leverage it for your business.

What’s ONDC? A Simple Guide To Its Functionality

ONDC, or the Open Network for Digital Commerce, is a new initiative by the Government of India to revolutionize e-commerce. It aims to create an open, inclusive network that connects buyers, sellers, and service providers across various platforms, leveling the playing field for small businesses and local retailers to compete with big players like Amazon and Flipkart.

Think of ONDC as a public digital infrastructure, similar to the Unified Payments Interface (UPI) for payments. Just as UPI unified different banks on a single platform, ONDC seeks to build an interoperable network for online commerce, allowing businesses of all sizes to reach customers without being confined to a single marketplace.

A Look At How ONDC Works And The Basics of Its Functionality

E-commerce in India received US$ 15 billion of PE/VC investments in 2021, which is a 5.4 times increase year-on-year

(Source: IBEF 2022)

Think of ONDC (Open Network for Digital Commerce) as a decentralized network that connects e-commerce transactions across various platforms. Here’s how it works:

1. Connecting Buyers and Sellers Everywhere: Traditionally, online shopping meant sticking to one platform like Amazon or Flipkart. ONDC changes that by allowing buyers to find products from multiple sellers across different platforms. For example, searching for shoes on any participating app could show results from a variety of sellers, expanding choices for customers and audience reach for sellers.
2. Seamless Interoperability: ONDC enables different e-commerce platforms, payment gateways, and logistics providers to work together effortlessly. A seller on one platform can sell to a buyer on another, with the transaction processed smoothly. Payments, delivery, and customer service are all coordinated through ONDC, making e-commerce more flexible.
3. Standardized Open Protocols: ONDC uses open standards that allow all participants, from large companies to small shops, to connect to the network easily, breaking down the barriers of closed, proprietary systems.
4. Empowering Small Businesses: ONDC is designed to give small and local businesses a fair shot in the online marketplace. It offers tools and access to help local shops, artisans, and small retailers reach customers without needing to invest heavily in their own tech.

What Financial Services Does ONDC Offer?

Did you know ONDC is also transforming access to financial services across India? From digital banking to loans and insurance, ONDC is building a more inclusive financial ecosystem, bringing essential services to millions.

What Financial Services Can You Access on ONDC?

1. Digital Banking Services: ONDC integrates various banks and financial institutions, allowing users to manage multiple accounts, check balances, view transaction history, and perform fund transfers like IMPS, NEFT, and RTGS—all within a single platform. You can also pay bills and recharge mobile phones seamlessly, simplifying financial management for small businesses and individuals.
2. Lending and Credit Services: ONDC is making loans and credit more accessible, especially for small businesses and rural communities. It offers quick access to small business loans for working capital or expansion, micro-loans for individuals, and tools to check and improve credit scores, helping users secure better loan terms.

By integrating these services, ONDC is not just reshaping e-commerce but also enhancing financial inclusion for everyone.

How to Use ONDC: Easy Steps for Beginners

New to ONDC? Here’s a quick guide to help you start shopping or selling on the platform.

Step 1: Understand Why ONDC Matters

• More Choices for Buyers: Shop across multiple platforms and sellers from one app.
• Greater Reach for Sellers: Small businesses can connect with a wider audience.
• Seamless Transactions: Open standards make it easy for different platforms to work together.

Step 2: Choose an ONDC-Compatible Platform

• For Buyers: Download apps like Paytm, Mystore, or Craftsvilla to shop from various sellers across categories, from groceries to electronics.
• For Sellers: Register on apps like Mystore Seller App, SellerApp, or GoFrugal to list products and reach customers on the ONDC network.

Step 3: Set Up Your Account

For Buyers:

• Create an Account: Sign up on your chosen app with your details and verify via OTP.
• Add Payment Methods: Link payment options like UPI, credit/debit cards, or digital wallets

For Sellers:

• Register Your Business: Provide your business details, like GST number and bank info.
• List Your Products: Add products with clear images, descriptions, and prices.
• Set Up Payments: Link your bank account or payment gateway to receive payments.

Step 4: Start Shopping or Selling

For Buyers:

• Browse Products: Search for items and compare options from multiple sellers.
• Checkout and Track Orders: Add items to your cart, choose payment methods, and track orders within the app.

For Sellers:

• Manage Your Storefront: Keep listings updated and manage stock.
• Fulfill Orders: Respond promptly to orders, maintain inventory, and provide excellent customer service.
• Use ONDC Tools: Utilize analytics and other tools to optimize your sales strategy.

Now you’re ready to dive into ONDC and explore its vast marketplace!