ONDC explained: meaning, how the open network works in India

ONDC is a network protocol and a non-profit company, set up in 2021 as a Section 8 company backed by the Department for Promotion of Industry and Internal Trade (DPIIT). A Section 8 company is one formed for a public purpose, which cannot distribute profit to its owners. It does not run a shop or a delivery service. It publishes open rules so that apps built by different companies can talk to each other.

The idea is similar to UPI, where any app can send money to any bank. In ONDC, a buyer using one app can find a seller registered on another app, place an order and have it delivered by a third party's logistics service.

A normal marketplace is a closed system: the same company runs the app the buyer opens, the catalogue, the payments and the delivery. ONDC breaks these jobs into roles, each of which can be done by a different participant on the network.

A buyer app (a buyer-side network participant) lets customers search and order. A seller app lists products and handles orders for shops. Logistics providers deliver, and payment and other services plug in through the same rules. When a buyer searches, the buyer app sends the query across the network and shows results from many seller apps.

• Buyer app: where the customer searches and places the order.
• Seller app: where a shop or brand manages listings, stock and orders.
• Logistics: delivery partners connected through the network.
• Network rules: the common protocol every participant follows.

ONDC itself has not charged a commission at the network level in its early years, and it has indicated that a small network fee may follow as the system matures. The apps on the network set their own fees. A buyer app can charge a buyer-finder fee, and a seller app can charge for its software and services.

Reported fees are usually a few percentage points. One seller platform lists a flat 3% plus GST for the buyer-side fee and 1% to 3% on its seller app. These figures are examples that change over time and between apps, and participants can waive fees, so a seller should read the terms of each app.

The cost comparison with big marketplaces drives the interest. Large platforms are reported to charge commissions that can run much higher for some categories, which is why restaurants and small retailers have looked at ONDC.

Large technology and payments companies, banks and delivery players have joined in different roles. Paytm acted as a buyer app and was reported to have waived its commission on some orders. Many startups have built seller apps and logistics or buyer apps. StopDown's own coverage lists current examples. A company joining ONDC does not mean large order volumes, so check the actual numbers in any story.

Food delivery, local grocery, mobility and some retail have been the early areas, because they are local, frequent and sensitive to commission. Restaurants, small grocers and neighbourhood stores have the clearest reason to try an open network, since the commissions they pay on closed apps are a large part of their cost. Mobility services such as auto and cab booking also run on the network in some cities.

Large, branded categories such as electronics depend on trust, returns and fast delivery, which big platforms are good at. Open networks have to build the same trust through ratings, grievance handling and standard policies shared across participants.

Consumer protection still applies. The Consumer Protection (E-Commerce) Rules 2020 set duties for e-commerce entities such as showing seller details, handling complaints and not manipulating reviews. ONDC has published its own network policy that covers participant roles, grievance handling and search listing. As of November 2026, check the ONDC website for the latest policy, since network rules are updated through versions.

UPI turned payments into a public rail that any bank or app can use, which lowered the cost of digital payments and let new apps compete. ONDC tries to do the same for commerce by making the technical interface open. The comparison is useful but incomplete. A payment is one standard action with two parties. A commerce order has a catalogue, a price, stock, delivery, returns and complaints, and each needs agreement between several participants.

This is why ONDC adoption has been slower and more uneven than UPI's. It also explains why the question for startups is less about the protocol and more about who will bring buyers to the network and keep them.

For a closed marketplace, ONDC is a possible threat because sellers could reach buyers without paying the platform's fees. For small sellers, it lowers the cost of being found online. The effect depends on whether buyers use ONDC apps in large numbers, which is the main open question. Marketplaces rely on network effects, where more buyers attract more sellers and the reverse. ONDC tries to share that effect across the network rather than inside one app.

A seller registers with a seller app, which helps with the product catalogue, pricing, stock and order handling. Many seller apps offer simple dashboards for small shops, and some help with GST details and bank settlement. The seller then appears in search results across buyer apps that connect to the network.

Before joining, a seller should compare the fee tables of seller apps, ask how quickly payment is settled and check how returns and complaints are handled. Because each app sets its own terms, two sellers on the same network can pay different costs for the same order.

A practical test is to run a few orders and compare the money received with the same orders on a closed marketplace, counting commission, delivery, payment charges and returns. The right choice may be to use both, since the network adds a channel and does not require leaving others.

Discovery and trust are harder in an open network, because a buyer may not know the seller. Delivery quality, refunds and returns depend on several parties. Order volumes remain small compared with the largest platforms, and apps still spend money on discounts to attract users. Investors should treat ONDC as a policy and technology shift with an uncertain pace.

This page is a general explainer and not legal or investment advice. Check ONDC's current policy and consult a professional before relying on any rule or fee.