RBI expands scope of Bharat Bill Payment System
In a consumer-friendly initiative, the RBI on 16th Sep19 expanded the scope of Bharat Bill Payment System (BBPS) to cover all repetitive bill payments, which may include school fees, insurance premiums and municipal taxes. BBPS is an interoperable platform that enables a customer to pay bills such as telephone, water, gas, direct-to-home (DTH) and electricity at a single location electronic or physical. With the expansion of the scope of the payment facility, other recurring payments such as school fees, municipal taxes, insurance premiums can also be paid via BBPS.
Currently, BBPS covers bills of five segments – direct to home (DTH), electricity, gas, telecom, and water.
The objective of BBPS is to implement an integrated bill payment system that offers interoperable and accessible bill payment services to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment.
Players, including scheduled commercial banks, regional rural banks/ urban co-operative banks / state co-operative banks / district central co-operative banks / payments banks / small finance banks / BBPS providers and system participants, who cater to the requirements of bill payments as well as aggregation of payment services, are part of BBPS.
As per BBPS website, the facility would be expanded to include other types of repetitive payments like insurance premium, mutual funds, school fees, EMIs, and municipal taxes, among others.
Commenting on RBI’s decision, DGM of Taxmann Rachit Sharma said expansion of biller categories would increase the user base of Bharat Bill Pay along with providing an efficient, cost-effective alternative to the existing systems and enhance consumer confidence and experience.
BBPS is an integrated bill payment system which offers interoperable bill payment service to customers online as well as through a network of agents on the ground. The system will provide multiple payment modes and instant confirmation of payment.
BBPS payments can be made using cash, cheques as well as through digital methods such as internet banking, debit, credit card, among others. Bill aggregators and banks function as operating units and carry out these payment transactions for customers.
“In order to leverage the advantages of the BBPS and harness its full potential, it has been decided to permit all categories of billers (except prepaid recharges) who provide for recurring bill payments to participate in BBPS on a voluntary basis,” the RBI had said on August 7, adding detailed instructions will be issued by the end of September.
Apart from digitization of cash-based bill payments, these segments would also benefit from the standardized bill payment experience for customers, centralized customer grievance redressal mechanism, prescribed customer convenience fee and the like.
What is Bharat Bill Payment System?
The Bharat bill payment system is a Reserve Bank of India (RBI) conceptualised system driven by National Payments Corporation of India (NPCI). It is a one-stop ecosystem for payment of all bills providing an interoperable and accessible “Anytime Anywhere” bill payment service to all customers across India with certainty, reliability and safety of transactions.
How will Bharat Bill Payments System benefit you?
The biggest advantage is that the bill can be paid anywhere and anytime. There would be retail points for bill payments across the country who would be able to accept all kinds of bills payments made through credit cards, debit cards, mobile wallets, net banking (IMPS, NEFT). The BBPS outlets would include banks, ATMs, business correspondents, kiosks etc. and payments would be made securely through the NPCI network with instant receipts getting generated.
Utility service providers would be able to get payments instantly, they would not need to maintain bill collection centres by themselves, value added services can be added by the operators, bills can be generated electronically and disbursal can also be electronic. Along with these, the BBPS platform would have fraud monitoring and risk mitigation systems in place in order to ensure smooth online transactions.
1. Bharat Bill Payment Central Unit (BBPCU)
National Payments Corporation of India (NPCI) has been authorized by RBI as the Bharat Bill Payment Central Unit (BBPCU) and is responsible for setting business standards, rules and procedures for technical and business requirements for all participants. The BBPCU undertakes clearing and settlement activities related to transactions routed through Bharat BillPay.
2. Bharat Bill Payment Operating Unit (BBPOU)
Bharat Bill Payment Operating Unit aka BBPOU is the entity that is authorized by Reserve Bank of India. It can be a Bank or a Non-Bank. BBPOU may choose to integrate either with the customers, (COU: Customer OU) or with the billers (Biller OU) or may wish to participate as both – which means such BBPOU will be integrated with customers as well as billers.
Going forward, only authorised BBPOU – both banks and non-banks authorised by RBI – can handle payment and aggregation of payment services relating to bills under the scope of Bharat BillPay.
3. Agent Institutions
Eligible Entities who wish to offer or those who are currently in bill payment, collection and aggregation business would operate under a COU (Customer BBPOU) on receiving authorisation from RBI.
Customer BBPOU will on-board Agent institutions which may further on-board agents and/ or set up customer service points in various regions and locations.
Agents are the customer touch points and service points in the Bharat BillPay ecosystem available in the form of agent outlets, Business Correspondent outlets, Bank branches, collection centres, and retail outlets
5. Biller/Utility Company
Service providers, who shall receive payments from customers for services rendered. By participating in the Bharat BillPay scheme, the biller will be able to receive payments from third party channels for the services provided to the customer. A biller may tie up with up to two BBPOUs to access the entire universe of its consumers and all payment channels.
How it differs from Mobile Wallets?
While PayTM and some other wallets have already been offering these services through their online channels, their coverage has been limited to major Tier I and Tier II cities. BBPS can make this a national phenomenon, such that a person in a rural area can also pay her bills via the BBPS operating units, be it a bank or an online service provider. Also, once fully operational, it would provide access to payments via ATMs, MPOS machines, business correspondents and agents allowing full integration of services even in the remotest of regions.
While the NPCI does not specify any charges for these services, in order to make it viable, banks may charge a fee. Wallet providers have been luring customers with discounts, but the whole model might pivot to banks charging a convenience fee.
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