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NPCI to hive off Bharat Bill Payment System: Report

The National Payments Corporation of India (NPCI) is planning to hive-off its bill payments platform, Bharat Bill Payment System (BBPS), into a separate entity called ‘NPCI Bharat BillPay’, the Financial Express reported citing unnamed sources. NPCI Bharat BillPay will be the second subsidiary for the umbrella retail payments organisation, after NPCI International Payments Limited.

BBPS is an inter-operable bill payments platform that banks, fintechs, payment companies and biller merchants use to send bills to customers and accept payments on behalf of merchants. At present, there are 341 billers from telecom companies, utility providers, insurers to DTH operators and close to 19,000 educational institutions using BBPS for recurring payments. In November this year, there were nearly 24 million transactions worth ₹3,713 crore on the BBPS platform.

However, compared to NPCI’s flagship platform Unified Payment Interface, BBPS’ adoption has not kicked off and is only one-tenth of UPI’s size; in November, UPI clocked nearly ₹3.9 lakh crore worth of transactions. Between April and November, there were over ₹19.35 lakh crore transactions on UPI compared to ₹21,900 crore on BBPS.

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The NPCI did not respond to queries sent by us.

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According to the BBPS website, as of November, India Ideas (Bill Desk), Paytm Payments Bank, Airtel Payments Bank, Infibeam Avenues and Axis Bank were the top five BBPS operators based on volume of transactions on the billers’ side, while HDFC Bank and ICICI Bank were in contention with Bill Desk, Paytm and Airtel.

It is interesting to note that the NPCI is not spinning RuPay or UPI into a separate entity first, two platforms that have a far bigger transaction volumes and consumer presence compared to BBPS. Citing unnamed sources, the report Financial Express says that the BBPS platform is being spun off so that it can be managed better with a dedicated focus and growing the platform without the dependence on the NPCI. The report also said the Reserve Bank of India (RBI) has approved the move to hive-off BBPS.

As the chief retail payments organisation in the country, the NPCI has embarked on several strategic changes recently. In August, it set up NPCI International Payments to export UPI and the RuPay card model to foreign jurisdictions. Soon thereafter, NPCI International submitted a bid to build a retail payments system with the Central Bank of Myanmar. And last month, the NPCI sold a small equity stake to 19 new shareholders which included smaller banks, fintechs, payments companies and aggregators.

With the RBI opening the door for competing retail payments organisations, the NPCI’s decision to hive-off BBPS has two implications. The first, is that it by hiving-off the platform to be run independently, billing companies and bill payment companies currently on the BBPS network can contribute equity capital to build and develop the payments platform, while the management of NPCI Bharat BillPay focusses on products and strategies to grow the platforms’ consumer and biller base. Whereas on the other hand, the move to diversify its shareholding and hive-off BBPS signifies NPCI’s adherence to recommendations laid out in the Watal Committee report which called for “ownership and infrastructure neutrality” or a separation between operators, infrastructure providers and regulators of a payments platform.

 

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

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