Bill payments. BL Explainer: How does Bharat Bill Payment System work?

What is the Bharat Bill Payments System?

It is an integrated bill payment system or a platform which acts as a connect between various billers and users. The Bharat Bill Payment System offers customers the convenience of payment by cataloguing various utility providers under one platform. It acts as a central reference for a customer who wants to make different payments — whether utility bills, loan repayments, FasTag recharge, and so on.

Who are the stakeholders in the BBPS ecosystem?

BBPS was conceptualised by the Reserve Bank of India in 2013 and is a product of the National Payments Council of India (NPCI). It was piloted in 2016 and went live a year later. By 2019, BBPS onboarded all recurring payments. There are two key components in the BBPS system — Bharat Bill Payment Central Unit (BBPCU) and Bharat Bill Payment Operating Units (BBPOUs).

The BBPCU is NPCI, which lays downs the operating procedures and standards for BBPS. BBPOUs adhere to the rules set by BBPCU. They are the banking and non-banking entities that handle the payments load. Then, there are billers (utility providers) and agents, either as institutions or individuals, who provide services primarily on the collection side, to BBPOUs.

What purpose does it serve?

Convenience and access irrespective of the nature and form of payment. For instance, as a customer you may have certain utilities such as phone, electricity, gas, and water bills to pay on a monthly basis. Under BBPS, all these utilities are listed in a single website. You must choose the payments to make and that will take you to the vendor website for the processing. You don’t have to go to each website separately to make the payment. That’s the convenience it offers.

Likewise, BBPS is payment mode agnostic. It supports IMPS, NEFT, UPI, cheques, wallets and even cash. For instance, if a gas bill has to be paid in cash, the website provides the nearest BBPS collection point. Unlike the branch office of the gas agency which may be open from 9 am to 6 pm, the collection point may be available for longer hours. You pay cash to the person at the counter and a receipt is generated. It acts as a one-point-stop for all bill payments. Cheques can also be remitted through these agents.

But note, that BBPS is only a platform. If a transaction has a settlement duration of T+1 or T+2, as with UPI or cheque payments, BBPS cannot bypass the time taken for payment processing. It only facilities in making and concluding a payment in a common platform.

How has the growth in BBPS been over the years? How many users transact on the platform?

There are 33 active BBPOU billers and 66 BBPOU customers. This covers most banks and large NBFCs, particularly those relevant for payments. There are 19 categories of billers, which include electricity, insurance, water, and municipal taxes, piped gas, housing societies, credit cards, loan repayments and prepaid mobile phone cards. As of November, there are 20,519 live billers (or utility providers) listed in BBPS. Though BBPS is not widely spoken about yet, the quantum of transactions has risen multi-fold in four years. From April to November of FY23, BBPS processed ₹1.22-lakh crore or 689.63 million (in volume) transactions. Compared to FY18’s load of ₹9,099.3 crore (73.39 million) transactions, this is an exponential leap.

What has changed for the BBPS since the recent monetary policy?

While a reasonable chunk of billers and utility providers are covered under BBPS, the RBI Governor said the platform will be extended to all payments and collections, including those that are non-recurring, such as professional service fee, tax collection and rent payment. In August, BBPS opened inbound bill payments facility for NRIs.

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