The RBI has a new concept in Draft: The Bharat Bill Payment System.
This is just a GIRO (the concept of a customer initiated transaction) based payment system. Bills that are generated are paid by customers, but the experience varies: some electricity bills don’t allow certain forms of payment, others have technical issues, a third don’t let you pay online at all etc.
There will be a single regulator called the BBPS, and operational units called BBPOUs. These are, for the most part, big acronyms.
BBPS will set the rules for the system. What kind of payment systems will be supported, how much time it will take for each kind of system (cash will take longer than credit card for instance) etc. They’ll also frame the protocols needed for the OUs to operate with it.
BBPOUs are effectively the payment intermediaries, operating under the rules and protocols set by the BBPS. They will on-board the billers (like merchants, electricity companies, telecom companies etc) and customers as well, through agents.
A customer initiates the transaction to pay someone. All bills will need to part of this system, so when they choose to pay, they can pay any biller, including those that are not part of the same OU they are registered with.
The OU will receive the money (into an escrow account) and send the money over to BBPS for onward payment into the actual biller. The biller’s OU will then get the money, and will send a “net” amount to the biller’s bank account.
If the biller and customer are with the same OU, then the money will be settled right at that level, without going to the BBPS.
There will be a centralized tracking system – the BBPS will actually take your complaint (for bills of any kind) and grievances will be passed on to the billers and the status can be tracked centrally.
OUs make money by charging billers a commission, and that commission will somehow have to be distributed across everyone in this chain. But we’re not sure how, just yet.
Essentially, this system allows anyone to pay any bill. A worker in Mumbai can pay his family’s electricity bills in Bihar, paying cash to an OU in Mumbai. An NRI can pay his parents’ property taxes online through his credit card used at the payment gateway of an OU on the internet. Billers don’t have to create infrastructure to pay bills or make deals with different payment gateways. (Just sign up with an OU, decide how much commission you will pay, and you’re on).
The BBPS can change bill payments hugely – and will have to involve companies like BillDesk or PayTM. Eventually, all online “wallets” will integrate here.
What I would ask for:
- Let third parties “read” such payment statuses through a read-only API so that they can provide proper reporting solutions, like wealth planning or personal finance management.
- Allow web sites to help the customer initiate the transaction where all details are prefilled (biller name, amount etc.) so that friction in entering all that is taken away – and only specific payment types are initiated.. These would essentially be agents.
- Clarify how commissions will be structured when the biller is not on the same OU as the payer.
- Provide an interface for creditworthiness – if a customer is a regular user of the system and pays his bills on time, his credit score should be available to other billers to offer better terms or better products.
- Focus on high quality reporting to the billers – the payer’s bank accounts, full transaction details including bill number, date, name/Pan Number of payer and at least two extra “free form” fields and so on. The biggest pain for, say, an apartment association to receive payments online is the fact that NEFT payments aren’t big enough to send enough info (What kind of pmt – deposit or maintenance, which apartment, which month). And banks provide NEFT info to the biller in a very non-standard way.
Let’s see how this evolves. I’m excited and looking forward to it!