ONDC encourages ride-hailing apps to increase penetration outside metros: T. Koshy, MD & CEO

Managing Director and CEO T. Koshy said the Open Network for Digital Commerce (ONDC) is working with existing network players as well as interested applications to increase penetration in secondary and tertiary markets to achieve true Democratizing the mobile ecosystem, the agency’s executive said during a media discussion on Monday.

The executive said that while innovation and methods to expand serviceability are in the hands of companies on the open network, ONDC is helping participants improve discoverability.

Nitin Nair, Senior Vice President, ONDC South India Division, added that the structure of the network encourages small players to join and serve a region, thus helping to meet local needs.

“Ultimately, the network becomes the orchestrator for more participants to join. ONDC’s unbundled network structure means there will be more participation. On top of that, discoverability is an important aspect,” Nair said.

diverse ecosystem

The ONDC structure includes buyer apps and seller apps across categories, including food delivery, ride-hailing, e-commerce and groceries. The buyer application brings the consumer demand, while the seller application processes the orders. Currently, mobility accounts for about 40% of the 15 million transactions on the network, with Kochi Metro and Chennai Metro Rail Ltd leading the way.

Namma Yatri, one of the top rickshaw-hailing apps on the web, recently raised $11 million and was hailed as a “success story” for ONDC in the government’s Economic Survey of India 2023-24.

ONDC is also encouraging companies to adopt a zero-commission model, where companies provide software to drivers rather than charging a commission on each transaction.

“Unlike aggregators, a zero-commission SaaS model does not exercise control over attributes such as pricing and payment collection, or the actual delivery of shipping services. The zero-commission SaaS model can best be described as a pure software interface that operates by focusing on discoverability. Enabling peer-to-peer interactions between drivers and passengers, these models, when on the ONDC network, can benefit from its strong trust-building framework, which includes grievance redressal, transparency, fairness and non-discrimination,” ONDC said. The model in the mobile app is explained in its white paper titled “Driving Digital Inclusion – Open Networks and New Businesses,” released on Monday.