Reserve Bank of India is planning to create an Indian Bill Payment System (IBPS) that will be behave like a centralised payment gateway for making all bill payments. Besides paying bills, the system could also be adapted for use by educational services, financial and insurance services, government services, technology and media services, telecommunications and utilities services, apart from transportation services.

The new proposed system will operate in a tiered structure, with a non-profit such as National Payments Corporation of India acting as the Bharat Bill Payment Services (BBPS), the standard setting body. For-profit companies will be called Bharat Bill Payment Operating Units (BBPOUs) and will be the authorized operational units, working in adherence to the standards set by the BBPS. Any company registered under the Companies Act 1956 can become a BBPOUs after obtaining necessary certification from BBPS for joining the centralised bill payments system.

Why is RBI developing such a system?

– There is no interoperability in current bill payment solutions.
– Low trust in agent network, so people prefer to make payments physically with the service provider.
– Bill payment centres are not easily accessible in rural areas.
– There has not been any industry driven approach to solve the issue of interoperability that would not only make bill payments convenient for consumers, but also improve operations efficiency of the billing company.
– There is no single website from where all bills can be accessed and paid.

How will this help you?

Till now you had to visit multiple sites to make bill payments or even different agencies. With this approach people will have access to all utilities from all BBPOUs. You could also make payments against any of the utilities from a centralised website set up by BBPS.

In case a payment doesn’t go through or is not reflected in the next bill, you can approach the BBPOU through which you made the payment instead of dealing with sarkari babus. The assumption here is that BBPOUs will resolve issues faster since they will be private companies, but then the number of billing issues people have with telcos puts a hole in this theory.

What will BBPOUs do?

– BBPOUs will be responsible for handling consumer grievances. So you don’t need to run to multiple agencies to figure out who can help you resolve an issue with bill payment.
– It will be responsible for onboarding banks, agents, billers and aggregators
– It will be responsible for appointing agents
– Ensure confidentiality and privacy.
– Develop infrastructure such as APIs and handle transactions securely.

What will BBPS do?

– Set standards for onboarding, dispute resolution, information exchange.
– Will handle the marketing and branding of the billing system.
– Will carry out the payments; clear and settle transactions.
– Will set up the centralised website for bill payments.

What about payment gateways?

From the looks of it, they might not have any place in the bill payment ecosystem any more. It looks like the central payment system used by RBI will be the only one that will be prevalent. This is not a good idea from a consumer perspective also, since private companies can innovate faster and even offer a better user experience.

If RBI will allow only their payment gateway to be used, then there is a chance that this could end up in a disaster like IRCTC train ticket booking. Sure, RBI is not a catering company, but scalability and reliability are things this new gateway will need to keep in mind to avoid issues that are common with IRCTC and the 2-step authentication system handled by banks.

Aggregators on the other hand will not be affected as such, due to their relationship with banks and other players in the ecosystem. Even if they don’t handle the payments, they will still be involved in negotiations with other parties.  That said, it is not clear how the revenue will be split or how much RBI will pay BBPOUs.