Latest News

Credit Card Bill Payment New Rules: RBI issues new rules, Will PhonePe and Cred work from 1 July?


➡️ Click here to join our Whatsapp Group

Starting from July 1, a new regulation mandates that credit card bill payments must go through a centralized billing network such as Bharat Bill Payment System (BBPS). This has led to significant disruptions for fintech startups such as Cred, PhonePe, BillDesk, and Inbeam Avenues. However, major Indian card issuers like HDFC Bank, ICICI Bank, and Axis Bank have yet to activate the Bharat Bill Payment System (BBPS), which is required for compliance with the regulation.

As a result, platforms like PhonePe and Cred, which are members of BBPS, will not be able to process credit card dues for these large banks and other non-compliant lenders.

Impact on Transaction Volumes and Industry Requests

Industry insiders are concerned that this lack of compliance could lead to a substantial decrease in transaction volumes for fintech platforms. The Payments Council of India has formally petitioned the Reserve Bank of India (RBI) for a 90-day extension to the deadline, but no decision has been announced yet.

Benefits of the Bharat Bill Payment System (BBPS)

The RBI’s directive to process all credit card bill payments through BBPS aims to enhance the efficiency and security of the payment ecosystem. BBPS offers a seamless and standardized experience for customers, lowers integration costs for issuers, improves oversight of collection points, and establishes a uniform grievance redressal mechanism.

Current Status and Potential Growth

Currently, only eight out of 34 banks authorized to issue credit cards have activated bill payments on the BBPS network. These include major players like SBI Card, BoB Card, Kotak Mahindra Bank, Federal Bank, and IndusInd Bank.

Data from the National Payments Corporation of India (NPCI) indicates that credit card payments currently constitute a small fraction (1.5%) of total BBPS transactions, with utilities and toll payments dominating the platform. However, there is significant potential for growth once major private banks fully adopt BBPS.

Potential Extension and Future Developments

There is speculation that the RBI might extend the deadline to mitigate potential disruptions, with an official decision anticipated later this month. The regulator is expected to prioritize customer interests, as it has done in the past.

NPCI’s Bharat Billpay (NBBL) is in discussions with major banks to onboard them onto BBPS, a process that could take several months. Meanwhile, fintech companies will need to comply with the new regulation or seek an extension to continue processing credit card bill payments through their platforms.

Conclusion

The new regulation requiring credit card bill payments to go through a centralized billing network has caused disruptions for fintech startups. Major banks have yet to activate the required system, potentially leading to a decrease in transaction volumes. The industry has requested an extension to the deadline, and the RBI is expected to make a decision soon. The Bharat Bill Payment System offers benefits in terms of efficiency and security, and there is potential for growth once major private banks fully adopt it.

2 Comments

  1. Making people fool by saying it’s centralized blah blah . This is just another way to keep a track and snoop on all payments & transactions going through. New age so called democracy is what it is.

  2. Where is the official RBI document? If you are going to write an article I suggest that you post support evidence.

Leave a Reply

Your email address will not be published. Required fields are marked *