Last week, the Reserve Bank of India (RBI) released the final guidelines for implementation of Bharat Bill Payment System (BBPS). Simply put, BBPS will be a centralized bill payment system that will allow you to use a single website or outlet to pay all your monthly or repetitive bills such as for mobile phone and electricity.

RBI had issued the draft guidelines in August, but it will take at least two years for the ‘anytime, anywhere’ bill payment facility to become a reality.

BBPS will function as a tiered structure for operating the bill payment system and will consist of two types of entities—Bharat Bill Payment Central Unit (BBPCU) and Bharat Bill Payment Operating Units (BBPOUs). National Payments Corporation of India (NPCI) will function as the authorized BBPCU. It will be the single authorized entity operating the payment system and will set the necessary operational, technical and business standards for the entire system and its participants, and also undertake clearing and settlement activities.

BBPOUs will be the authorized operational units, which will work in adherence to the standards set. While there will be a single central unit, there could be multiple BBPOUs.

“We will have to create a new entity and we will act as the operator for banks as well as non-banks. As of now, a single biller has bilateral tie-ups with 40-45 banks to maintain their accounts. The system will be designed in such a way that it will bring inter-operability and it will allow a biller to maintain account(s) with one operator for all its customers," said A.P. Hota, managing director and chief executive officer, NPCI.

Companies such as Swift India Domestic Services Pvt. Ltd and TechProcess Payment Services Ltd are also planning to enter this bill payments space. “We will approach NPCI and make our proposals. We want to function as a standards provider as well as act as an operator," said Saqib Sheikh, chief executive officer, Swift India.

Getting it ready

The process to set up and build the single window bill payment platform will take at least 18-24 months due to the scale of implementation. “To implement a single platform for all customers for all their bill payments will take a minimum of 18 months," said Hota.

Bill payment is a major component of retail payment transactions. According to an RBI committee set up to study the feasibility of implementation of GIRO-based payment systems (wherein the payer makes a payment transfer from one bank account to another), over 30.8 billion bills amounting to around 6.2 lakh crore are generated each year in the top 20 cities in India, and cash and cheque payments continue to be predominant.

“It will take around 12-24 months for NPCI and all other stakeholders to create the integrated bill payment platform," said Jitendra Gupta, founder and managing director, Citrus Payment Solutions Pvt. Ltd.

Kumar Karpe, chief executive officer, TechProcess, too, believes that the initial stages of setting up the process and standards will take 18 months.

Keeping cost in mind

The integrated bill payment system is expected to be interoperable, accessible to customers through a network of agents, allow multiple payment modes and provide instant confirmation of payment. So, once BBPS becomes live, you will no longer have to visit the individual billing company’s website or physical outlet to pay your bills. Gradually, the service may be extended to collection of other types of repetitive payments, such as school or university fees and municipal taxes or payments.

RBI pointed out that the system should serve as an efficient, cost-effective alternative to the existing systems. “Given the scale at which the integrated bill payment will be launched, it will definitely reduce cost for the consumers. It will be a shared platform and since RBI has given the responsibility to NPCI, which is a not-for-profit organization and collects money only to recover expenditure, the end-users should benefit," said Sheikh. Hota, however, feels that the emphasis will be more on standardization of fees rather than cost reduction.

Like any other service provider, BBPS, too, will have to provide details of all charges and fees associated with the payment facility.

Customer protection and grievance redressal will also be put in place and all those participating in the BBPS platform will be required to submit a report on customer complaints.

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