Bharat Bill Payment System (BBPS)

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Context

• The RBI has mandated that, starting July 1, all credit card bill payments via third-party apps must be routed through the Bharat Bill Payment System (BBPS).

Details

• The Reserve Bank of India (RBI) has introduced new guidelines for credit card repayments, effective July 1.
• All credit card bill payments via third-party applications must now be routed through the Bharat Bill Payment System (BBPS), managed by the National Payments Corporation of India (NPCI).
• This change affects credit card holders from major banks, who can no longer use third-party apps like CRED, PhonePe, Amazon Pay, and Paytm for bill payments.
• Users of banks that have not yet integrated with the BBPS platform will be particularly impacted.
• Understanding BBPS and identifying banks that have not integrated with it is now essential for affected users.
• This move impacts credit card holders from major banks who will no longer be able to use third-party applications like CRED, PhonePe, Amazon Pay, and Paytm for settling their bills.
• This change will impact users of those banks which have not yet integrated with the BBPS platform.

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).
• The Bharat Bill Payment System (BBPS) is an integrated bill payment system in India that offers interoperable and accessible bill payment services through a network of agents.
• Bharat BillPay has multiple modes of payment and provides instant confirmation of payment via an SMS or receipt.
• It offers Bill collection categories like electricity, telecom, DTH, gas, water bills, etc. and also other repetitive payments like insurance premium, mutual funds, school fees, institution fees, credit cards, fastag recharge, local taxes, housing society payments, etc. at one single window.
• An effective mechanism for handling consumer complaints has also been put in place to support consumer regarding any Bill related problems in Bharat BillPay.

Different Payment Channels

• Bharat BillPay transaction can be initiated through multiple payment channels like Internet, Internet Banking, Mobile, Mobile-Banking, Mobile Wallets, Kiosk, ATM, Bank Branch, Agents and Business Correspondents, by just looking at the Bharat BillPay logo.

Different Payment Modes

• Bharat BillPay facilitates myriad payment modes enabling Bill payments.
• The payment modes options facilitated under the ecosystem are Cards (Credit, Debit and Prepaid), NEFT Internet Banking, UPI, Wallets, Aadhar based Payments and Cash.

Components

The BBPS consist of two types of entities carrying out distinct functions –

1. Bharat Bill Payment Central Unit (BBPCU) which is the single authorized entity operating the BBPS. The BBPCU sets necessary operational, technical and business standards for the entire system and its participants, and also undertake clearing and settlement activities.
2. Bharat Bill Payment Operating Units (BBPOUs), is the authorised operational units, working in adherence to the standards set by the BBPCU.

Key Features

Interoperable	Bharat BillPay is an integrated ecosystem connecting banks and non-banks in bills aggregation business, Billers, payment service providers and retail Bill outlets.
Accessible	Facilitate seamless payment of bills through any channel: Digital and physical.
Integration	BBPOUs will have to connect only to BBPCU to get access to all the billers. Utility companies just need to connect to maximum two BBPOUs to enable all customers to pay bills.
Dispute Management	Facilitate BBPOU’s to raise and resolve disputes relating to transactions that have passed through the Bharat BillPay ecosystem.
Clearing & Settlement	Multiple Clearing & Guaranteed Settlements between different parties, standardised Turn-around Time (TAT).

Eligibility Criteria for System Participants

Bharat Bill Payment Central Unit (BBPCU) Requirements:

• Desirable to be a Section 25 company under Companies Act 1956 (Section 8 under Companies Act 2013).
• Must have professional senior management and experience in central infrastructure for payments.
• National Payments Corporation of India (NPCI) authorized as BBPCU.

Non-Bank Entities as Bharat Bill Payment Operating Units (BBPOUs):

• Must be a company incorporated in India under the Companies Act 1956/2013.
• Memorandum of Association should cover BBPOU operations.
• Required net worth of ₹25 crore at application time, maintained thereafter.
• Net worth includes paid-up equity, convertible preference shares, free reserves, share premium balance, and capital reserves, excluding accumulated losses and intangible assets.
• Certificate of compliance from Chartered Accountants required.
• Must have domain experience in bill collection/services and transaction processing for at least one year.
• Authorization under the Payment and Settlement Systems Act, 2007 from the Reserve Bank of India is necessary.
• Foreign Direct Investment approval required as per policy.

Bank Entities as Bharat Bill Payment Operating Units:

• Approval from the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 is required.

Non-Compliant Entities:

• Entities not meeting criteria but desiring to continue must seek time (up to one year) or partner with authorized Bharat Bill Payment Operating Units.
• Non-compliant entities failing to meet criteria will not be allowed to offer bill payment services.

Authorization

Bharat Bill Payment System Authorization:

• The Bharat Bill Payment System consists of Bharat Bill Payment Central Unit and Bharat Bill Payment Operating Units as an authorized payment system under the Payment and Settlement Systems Act, 2007.

Authorization Process:

• Banks require one-time Reserve Bank of India approval to operate as Bharat Bill Payment Operating Units.
• Eligible non-bank entities must obtain Reserve Bank of India authorization under the Payment and Settlement Systems (PSS) Act 2007.
• Entities must get Bharat Bill Payment Central Unit certification for adherence to Bharat Bill Payment System standards before final authorization.
• Existing non-bank entities need separate authorization for Bharat Bill Payment Operating Unit operations under Bharat Bill Payment System.

Settlement Model

Settlement Process:

• ON-US Transactions: Managed by respective Bharat Bill Payment Operating Units.
• OFF-US Transactions: Managed by Bharat Bill Payment Central Unit, involving net settlement between different Bharat Bill Payment Operating Units.

What is an On-Us and Off-Us transaction? A transaction carried out at an ATM of the card issuing bank is called an On-Us transaction. A transaction carried out at any other ATM is called an Off-Us transaction. For instance, if a card issued by bank A is used at an ATM of bank A then it is an On-Us transaction; if the card is used at a WLA or at an ATM of any other bank, the transaction is Off-Us.

Role of Bharat Bill Payment Central Unit:

• No role in ON-US transactions; Bharat Bill Payment Operating Units handle end-to-end settlement.
• Handles clearing and net settlement for OFF-US transactions.

Role of Bharat Bill Payment Operating Units:

• Manage settlement for ON-US transactions with designated settlement banks.
• Handle payment to billers and commission to agents.
• Follow Bharat Bill Payment Central Unit instructions for OFF-US transactions settlement.

Setting Settlement Standards:

• Bharat Bill Payment Central Unit sets standards for settlement accounts, time discipline, and payment realization cycles.
• All Bharat Bill Payment System participants must adhere to these standards.

Customer Protection and Grievance Redressal

Disclosure Requirements:

• Bharat Bill Payment Operating Units must disclose terms and conditions, charges, and customer service contacts in clear language.

Complaint Management:

• Centralized complaint management for ON-US and OFF-US transactions.
• Unique complaint reference number for tracking.
• No charges for lodging complaints.

Standardized Rules and Dispute Resolution:

• Uniform standards and Service Level Agreements for disputes.
• Interim complaint redressal by respective billers until Bharat Bill Payment System is fully operational.

Reporting:

• All Bharat Bill Payment System participants must submit reports on customer complaints as mandated.

Roles and Responsibilities

Bharat Bill Payment Central Unit Responsibilities:

• Set business, technical, and operational standards.
• Marketing, oversight, and certification of Bharat Bill Payment System operations.
• Manage payment, clearing, and settlement standards.
• Establish dispute resolution and fraud management frameworks.
• Implement appropriate Management Information Systems.

Bharat Bill Payment Operating Unit Responsibilities:

• Onboard billers and agents, ensuring confidentiality and privacy.
• Develop necessary infrastructure and applications.
• Ensure transaction safety and security.
• Handle customer grievances and disputes.
• Provide value-added services and comply with regulatory guidelines.

NPCI

Aspect	Details
Full Name	National Payments Corporation of India (NPCI)
Launch Year	2008
Promoters	Reserve Bank of India (RBI) and Indian Banks’ Association (IBA)
Legal Basis	Payment and Settlement Systems Act, 2007
Nature of Organization	Not-for-profit organization
Primary Objective	Promote and facilitate the adoption of electronic payments in India
Ownership	Owned by a consortium of banks
Initial Promoters	Ten major banks including State Bank of India, Punjab National Bank, Citibank, Bank of Baroda, HSBC
Current Shareholding	Broad-based to 56 member banks including all sectors
Key Payment Systems Operated	National Financial Switch (NFS), Immediate Payment System (IMPS), Aadhaar-enabled Payments System (AEPS), National Automated Clearing House (NACH)
Products Launched	RuPay, Bharat Bill Payment System (BBPS), Bharat Interface for Money (BHIM), Unified Payments Interface (UPI)
Revolutionary Product	Unified Payments Interface (UPI)

PRACTICE QUESTION Q. Which of the following criteria must non-bank entities meet to become Bharat Bill Payment Operating Units (BBPOUs) under RBI guidelines? 1.       Incorporation under the Companies Act 2.       Net worth of ₹50 crore at the time of application and maintained thereafter 3.       Authorization under the Payment and Settlement Systems Act, 2007 from RBI 4.       Approval for Foreign Direct Investment as per policy Select the correct answer using the codes below: A.      1, 3, and 4 only B.      1, 2, 3, and 4 C.      1 and 4 only D.      1, 2, and 4 only Answer: Option A. 1, 3, and 4 only

SOURCE: FINANCIAL EXPRESS