The possibilities and pitfalls of the Bharat Bill Payment System (BBPS)
The Bharat Bill Payments System (BBPS) is an incorporated fee machine offers interoperable and accessible invoice charge provider to clients thru a community of agents, permitting a couple of charge modes, and providing immediate confirmation of price. In May 2013, a committee below RBI Exec director G Padmanabhan studied Giro-based total bills worldwide and the feasibility of introducing Giro-based payment gadgets in India. While conventionally, Giro payments have been paper-based and used cheques, international became transferring closer to electronic GIRO, and the committee in its report proposed IBPS (Indian Bill Payment System).
In March 2014, Giro advisory organization, headed by IIT-B professor Umesh Bellur submitted the GAG Report, which defined the contours of rechristened Bharat Bill Payment System and counseled the formation of imperative standards to frame as a non-profit business enterprise called BBPS Central Unit (BBPSCU), both within NPCI or a comparable new entity, with a couple of for-earnings BBPS Operating Unit (BBPSOU) registered beneath it to provide commercial operations and make opposition.
As consistent with the RBI FAQ on BBPS, all entities involved in invoice price processing are now to be licensed underneath BBPS both as BBPSOU / as an agent underneath a licensed BBPSOU, with the aid of enjoyable minimal capital necessities and adherence to BBPSCU defined technical standards and tactics earlier than May 2017, then prolonged it to December 2017 or should exit the business, essentially putting the enterprise beneath licensing regime.
1. Consumer comfort
If you have paid electricity/water / local broadband company’s invoice through first-birthday celebration websites (if they have one), chances are you’ve got visible troubles with the interfaces, person reviews, and price failures. Personally, publish demonetization, I was paying Tamil Nadu electricity board’s bill, and the revel in is much like IRCTC of yesteryears. Aside from consumer experience (as minimal as payment confirmations), choice of price modes, dispute decision on failed bills have all issues that purchasers have encountered without tons recourse, basically because some of these biller websites or bill fee streams are usually the handiest (virtual) way to pay the payments.
2. Bill processing, aggregation — Interoperability/stage gambling discipline for startups
Electronic bill presentment and fee (EBPP) enterprise or online bill charge processing industry has been around for more than a decade. The invoice processor makes business agreements with billers (utility, telecom/net providers), offer more than one channels, each online (web, net banking, cell)/ offline (ECS, Kiosk, shops) with multiple payment strategies (Cash, cheque, playing cards, online payment, e-Wallets). These intermediaries (invoice aggregators / online payment integrators for billers) were introduced under RBI regulations in 2009 thru a route issued by using the Payments and Settlement Systems Act 2007.
BBPS gives a clean start to these processors, and the need to have agreements is no longer a precondition to offering a provider to the purchaser. Billers can’t block non-friendly / rival service companies from providing the provider bringing up business considerations.
3. Better collections at low cost for billers
Traditionally, application billers, particularly kingdom-owned energy PSUs / DISCOMs, have faced demanding situations in accumulating payments. Aside from “cost of cash” and the fee of collections, enforcement of consequences for non-price of bills would possibly sometimes cost even greater than the bill itself. Billing businesses have through the years adopted numerous way in fixing this cost of collection problem, ranging from ECS, which a few clients locate unfriendly, main to its gradual demise, online invoice price via payment gateway integration, exposing biller statistics to bill aggregators/collectors who in turn bought invoice price facility as a carrier via agent network, both offline (Seva centers / retail recharge shops) and online (e-Wallets/apps/internet banking). While the online invoice bills throughout channels stored developing, however, conventional cash-based invoice collection had huge dues/price of series.
In a few instances like UP DISCOMs, Black swan occasion Demonetization furnished a one-time remedy, but the problem largely exists even nowadays main to an accumulation of dues. BBPS, though its a couple of competing BBPSOUs (bank / nonfinancial institution price entities) and its agent networks, ambitions to boom performance of collections at low price via greater avenues.
The backstory and other effects
1. Public Credit Registry
RBI wants public credit score registry — Multiple economists (Viral Acharya, Watal Committee Report R6) in the executive believe that a public credit registry, a relevant database of loans, could help instill a higher credit score lifestyle inside u. S .. PCR is not the handiest database of loans but might also hold profiles, rankings of prospective credit seekers, which would be built through various information sources, including application bill payments.
While the contemporary credit score rating companies have records of typically anyone within the formal economy, records are hard to come back with the aid of those in the informal economic system, which constitutes a majority in India. Therefore, the govt has also installed a high-stage task force for PCR.
2. Flow-based totally lending
Giving credit based on the scoring of transaction records is the essence of flow-based totally lending. But that can be feasible simplest for those who do virtual bills / go away a virtual path. In the absence of real infrastructure, consumer considers, high cost of digital bills, coins might still rule. So the next alternative is to generate facts wherein-ever feasibly, right here comes invoice bills. Even when the bills are in cash, they will be linked to the character using identifiers (this is also a reason for ubiquitous linking is being driven), and scores can be built.
Credit ratings are normally maintained at a character degree. An active habitual-use ID, just like the UID, can assist in continuous scoring, profiling, and tracking the individual who could supply a semblance of low-danger of the credit because the individual can be tracked whenever. This is why UID is being pushed as a ubiquitous ID so that fleeing after acquiring credit is minimized. It is an altogether different element if the illusion of ‘low-danger interprets into low-hobby loans or lenders will maximize the earnings.
But even after a hundred% Aadhaar coverage, some will still be outdoor facts era activity (or information terrible) as the behavior of acting financial transactions may be restricted to at least one/few within a huge family. The common expenses of the family fed on with the aid of the whole circle of relatives can be allotted. In different instances, grouping the whole family data might be tough for smaller gamers who’re fragmented across payment channels.
As we flow into a much less-activity and gig financial system, three years of salary statements might be hard to come through for individuals seeking credit scores, and stepping into a scoring mechanism based on ordinary spending could be a better indicator of creditworthiness. So making that energy, water, and DTH invoice bills may also allow scoring families, measuring their area alongside their spending functionality. Aside from credit, other household degree economic offerings like health insurance, child financial savings, schooling loans for which monitoring, scoring, profiling at a family degree in ways extra powerful than a character stage. Soon other classes of invoice payments like faculty expenses, insurance rates, municipal taxes will get brought in BBPS, imparting convenience to clients, more enterprise to vendors, growth collection for billers at the same time as making the family information-rich, at least in terms of spending, instead of larger, 360 diploma statistics richness aspirations of SRDH/Server initiatives.
3. Agent community, countrywide scaling of Seva
Beyond launching the virtual infra, an important issue of BBPS is that it’d depend upon the agent network for collections. The expectation is more than one BBPSOUs will consciousness of developing the ultimate mile agent network with a purpose to supply purchasers more touchpoints to pay payments and offer sustainable economic incentives for retailers and provide self-employment opportunities. CSC is one BBPSOU licensee, already operates contact points thru its community, and might be expected to grow its community in villages to offer digital offerings via its village-degree entrepreneurship application. While convenience charge isn’t charged in BBPS because the agent network expands, BBPS is designed to house a convenience rate to make sure the sustainability of the platform and atmosphere participants.
4. Centralization is the brand new mantra
In the call of interoperability and standardization, we are being taken to an information centralization regime, in which consent doesn’t count. State/corporations have by hook or by crook got used to a scenario where the right to gather records without delay or indirectly via platforms like BBPS is implicitly given. The scope of power abuse will increase immensely with every entity gathering extra information and interlinking throughout every other. In the absence of an information protection invoice, infrastructure (prison, technical) to defend records, lack of discussion of FAT-ML (equity, responsibility, and transparency within the system mastering) in the Indian context, we are getting into a territory wherein there are good sized cybersecurity, privacy dangers and value of these should some distance exceed the blessings this records regime may. A sincere multi-stakeholder discussion is wanted of the hour before adopting facts-first systems.
The use of records for credit scores is seen as the finest reason to justify the growth in the centralization of information. India inside the beyond has seen suicides associated with credit score, be it the farmer suicides, micro-finance suicides. As I changed into writing this text, my own family set themselves ablaze in front of the Collectorate for failing to take action towards harassment associated with casual lending. Even though centralized information series packages violate the proper privateness, even after SC maintaining it as a fundamental proper, my best desire and prayer could be that the lending enterprise does no longer harass/kill any extra humans.