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What is the Beckn protocol - the backbone of ONDC?
What is the Beckn protocol - the backbone of ONDC?

May 31, 2023

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We all must have heard the hype ONDC has created over the past few months. It is aimed at revolutionising and challenging the status-quo of the e-commerce industry and has already created ripples across the entire industry. During and post pandemic, the use and dependence of e-commerce skyrocketed and led to many of the large companies exercising monopoly.

With the emergence of ONDC, the e-commerce industry could enable various buyers and sellers, irrespective of their size, to get equal footing.

 

What is ONDC?

ONDC is a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers to create an inclusive ecosystem to include all the sellers in the unorganised markets as well. In other words, ONDC is an open-source network, which will help local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel to reach and engage more people through a network-enabled application.

 

Foundation

India has over 12 million sellers, earning their livelihood from buying and selling goods and services, often in the organised sector. But only a miniscule proportion of that (0.125%) has enabled e-commerce. Through the open protocol, the penetration of e-commerce in the country is dramatically increased.  

The foundation of ONDC are open protocols for all aspects in the entire chain of activities in exchange of goods and services, akin to hypertext transfer protocol for information exchange over internet, simple mail transfer protocol for exchange of emails and unified payments interface for payments.

These open protocols would be used for establishing public digital infrastructure in the form of open registries and open network gateways to enable exchange of information between providers and consumers.

ONDC is a step beyond the current platform-centric e-commerce system where both the buyer and seller have to use the same platform or application to conduct a business transaction. Businesses and consumers will be able to carry out transactions over ONDC using any compatible application of their choice. The foundation / backend of ONDC is built on the Beckn Protocol.

 

What is the Beckn Protocol?

Beckn Protocol is an open and interoperable protocol for decentralised digital commerce. The first of its kind across the globe and developed by Nandan Nilekani, Pramod Varma and Sujith Nair, Beckn Gateways provide anonymised aggregated data generated from the network. The interoperability achieved by unbundling packet transmission layer from experience layer, so that the core of commercial transactions such as discovery, order booking, payment, delivery and fulfillment can happen in a standardised manner.

This means that no matter what the nature of one’s business is, the commercial offering of the transaction is stripped down to its core elements - discovery, order booking, payment, delivery, and fulfilment. Then, by treating each of these elements as micro-transactions, Beckn allows any or all of them to be carried out by a variety of Beckn-enabled enterprises.

It can be customised based on the requirement of customer and provider by taking modular approach. Beckn is not ecommerce specific and can be used in other area of digital public infrastructure like healthcare, mobility etc. In fact, Namma Yatri and Kochi Open Mobility Network are already using the open specifications of Beckn and already operational and solving mobility related issues in Bengaluru and Kochi respectively.

Beckn is not an app or a website or a platform. It’s an open protocol (a set of well documented specifications) that allows fair and transparent rules of play for market participants. It allows the creation of a distributed digital market that resembles an open playground that is free and fair, instead of being closed and non-inclusive. Each participant, by virtue of implementing the Beckn protocols, can join networks powered by Beckn and become discoverable at their own command. Beckn is nothing more than a set of protocols that enable market participants in any commercial ecosystem to interact directly with each other without the need for a platform intermediary.

 

Conclusion

India is at a very exciting juncture owing to the massive success of its Public Digital Infrastructure, which have become a means to build decentralized, interoperable, building blocks and unleashed inclusive innovation at a scale previously unheard of. A lot of exciting startups and companies are building their niche solutions on these open protocols and APIs and creating solutions to solve real life problems. The ride is only going to get bigger and better, and one can only wait in anticipation as to which industry is expected to be disrupted next.

 

Sources:

  1. https://becknprotocol.io/
  2. https://fide.org/
  3. https://ondc.org/about-ondc/
  4. https://pib.gov.in/Pressreleaseshare.aspx?PRID=1814143

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Vandhna Babu
Principal Analyst - Research

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