ADVERTISEMENT

Inside Bharat Bill Payments’ Expansion Plans

An expansion of the Bharat Bill Payment System depends on the ability to expand the use cases for the platform.

A customer purchases light-emitting diode (LED) bulbs at a Tata Power Delhi Distribution Ltd. office in New Delhi, India, on Tuesday, Sep. 5, 2017. (Photographer: Prashanth Vishwanathan/Bloomberg)
A customer purchases light-emitting diode (LED) bulbs at a Tata Power Delhi Distribution Ltd. office in New Delhi, India, on Tuesday, Sep. 5, 2017. (Photographer: Prashanth Vishwanathan/Bloomberg)

The Reserve Bank of India’s plan to introduce more billing entities on the Bharat Bill Payments Service rests on expanding the use case for such platforms. While the platform is so far used largely for utility payments, the Reserve Bank of India’s latest decision to allow other categories of billers could mean that consumers will be able to make a wider range of payments from school fees to building society charges using Bharat Bill Pay.

In its ‘Statement on Developmental and Regulatory Policies’ on Aug. 7, the RBI said it will permit all categories of billers, except prepaid instruments, to provide recurring bill payments through the BBPS on a voluntary basis. This would help standardised the bill payment experience and centralise the customer grievance redressal mechanism at a prescribed customer convenience fee.

The central bank also said that it would offer on-tap authorisation for more players to participate in three retail payments systems, including BBPS.

Growing Popularity

The BBPS bill payments platform is currently only open for electricity, telecommunications, direct-to-home cable operators, gas and water utilities across the country.

In its less than two-year existence, the platform has seen transaction value jump from Rs 1,098 crore in FY18 to Rs 9,099 crore in FY19. This data reflects completed bill-payments passing through the Bharat Bill Payment Central Unit, for which NPCI is the sole operator.

“The objective of the BBPS is to implement an integrated bill payment system in the country and offer interoperable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment,” the RBI had said in the draft guidelines it issued for the platform.

NPCI is the BBPCU and is responsible for setting payments standards as well as rules and procedures for technical and business requirements for all participants, the RBI authorises banks and non-banking entities to participate on the platform.

How Does It Work?

The platform was created for invoicing bills and processing recurring or subscription-based payments for customers and billing-entities.

While there are 155 billers or entities—135 live and 20 in progress of being on-boarded—on the BBPS system today, this base is expected to expand over time.

For instance, the NPCI’s website itself says that the platform can, over time, be used to process insurance premium collections, mutual funds, school fees, institution fees, credit card payments and local taxes.

Operationally, financial services entities and payments service providers connect to the BBPS system in three ways; either as a Bharat Bill Payment Operating Unit that is customer facing, as biller-facing BBPOUs or a BBPOU that does both. Further, there are hundreds of agents-on-the-ground that provide bill payment services to customers, with cash, through the BBPS.

“If an entity primarily serves customers it is termed as Customer BBPOU or if their role is to serve the billing entity/billers across categories it is termed as Biller BBPOU. Further an entity can do both, acquire billers onto the bill payment ecosystem as well as open up multiple channels and mode of payments to customers for one-stop bill payment,” said AR Ramesh, chief of BBPS at the NPCI.

Currently, there are 68 live customer BBPOUs which send customers invoices and processes their payments through the BBPOUs’ own mobile application or website, said an official familiar with the data on condition on anonymity. On the other hand, there are 21 biller BBPOUs in operation that bring the billing entity, such as a state electricity or water utility, onto the BBPS platform, the person added.

While the end-use for customer BBPOUs is to send customers invoices and process their payments, biller BBPOUs improve the speed, transparency and efficiency with which invoices are created and paid.

Expanding The Bill Payments Pie

Ramesh said that the NPCI will await further guidelines from the RBI before launching the service for entities in new sectors. He, however, sees significant potential for expansion.

“The BBPS network will unleash its potential when many participants come on the platform and more biller categories are served through one-single integration,” he said.

According to Vivek Belgavi, partner and fintech leader at PwC India, tuition fees for educational institutions and housing society fees are the likely additions to the BBPS platform in the immediate future.

“A bill has two parts, one is the presentment part which details the amount to be paid and for what purpose and the second is the payments process. With the Unified Payments Interface, the payments-side issues has been sorted out, therefore BBPS was conceived to effectively introduce standardisation and inter-operability on the presentment side,” Belgavi explained.

Belgavi added that once new use-cases are introduced into the system, newer types of BBPOUs would come in, for instance companies or startups that are trying to solve specific problems in certain industries like education and housing societies.

For BillAvenue, a bills processing platform, the central bank’s move will expand the entire market for bill payments, said Mohan Nair, chief marketing officer, Infibeam Avenues Ltd.

“Education is a humongous opportunity for BBPS and we already provide payment gateway services to many institutions,” he said, adding that if an educational institute has its billing system in place and has technology at the back-end it would take around two weeks for it to be on-boarded on BBPS through application programming interfaces.

BBPS can play a very important role in insurance, and mutual funds, credit cards and equated monthly installments as well, he added.

The story has been updated with data of completed bill payments via the platform provided by NPCI after the report was first published.