The Reserve Bank of India (RBI) has directed e-commerce marketplaces to ensure that payments to merchants are processed within two days after the transaction has been completed, i.e., after customer has made the payment, reports The Times of India. As of now, most online marketplaces take about 7-14 days to clear payments. This directive is in response to a complaint filed by the All India Online Vendors Association (AIOVA) regarding repeated delays in payment clearance from marketplaces.

In 2009, the RBI had issued guidelines regarding “settlement of payments for electronic payment transactions involving intermediaries” under Section 18 of the Payment and Settlement Systems Act, 2007. As per the guidelines:

4.1 The final settlements of funds to the merchants are presently guided by business practices followed by the intermediaries/merchants. In order to increase the efficiency of the payment process, it is necessary that banks transfer funds to the ultimate beneficiaries with minimum time delay. It is therefore mandated that banks shall implement the following settlement cycle for all final settlements to merchants. This settlement arrangement shall be implemented within three months of issuance of this circular:-

  1. 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).
  2. All payments to merchants involving nodal banks shall be effected within a maximum of T+3 settlement cycle.

An Amazon India spokesperson told MediaNama that it follows the RBI guidelines of T+3 settlement cycles for all sellers on its marketplace. The spokesperson also mentioned that they “have frequently received feedback from sellers on social media and other forums that Amazon maintains a very high degree of discipline in settling payments. In case there are any issues we react quickly to ensure sellers’ working capital is not impacted.”

We’ve written to Flipkart as well, and will update once we hear back.

AIOVA’s trade notice against Flipkart

In July this year, AIOVA had issued a trade notice against Flipkart, after it came to light that a technical glitch in Flipkart’s system was returning incorrect weight value, leading to weights being incorrectly recorded and charged to sellers (in form of shipping charges) at random instances. Improper weight values lead to incorrect shipping and reverse shipping charge being billed to sellers. AIOVA also alleged that such glitches were a regular occurrence at other marketplaces as well, since there is no “third-party audit” of vendor payment sheets.

A month before this, AIOVA had written to the government of India, asking it to institute a regulator for the e-commerce sector. Their demands included a grievance cell for online sellers similar to a consumer court, a competitive market that isn’t marred by monopoly or cartelisation of any kind, and a set of accounting and auditing standards. While last year, after Flipkart revised its return policy for buyers and increased commission rates, AIOVA and eSeller Suraksha (another online vendor association) had declared a strike against the e-commerce marketplace. The vendors had reportedly marked about 1 million SKUs (stock keeping units) as out-of-stock. AIOVA currently has 3,039 registered members.