With Axis Bank going live on the Bharat Bill Payment System (BBPS) for credit cards last week, the country's top five credit card issuing banks are now part of the the bill payment platform, as mandated by the RBI.
The largest five credit card issuing institutions are HDFC Bank, SBI Cards, ICICI Bank, Axis Bank and Kotak Mahindra Bank in that order. With these banks coming on board, most customers can use any fintech app for settling credit card dues.
Another mid-size credit card issuer, Yes Bank, is set to go live within the next 10 days, according to a source close to the development.
The RBI deadline was June 30 and, among the major issuers, only Kotak was live on the BBPS platform.
“Since the regulator did not extend the deadline, the larger banks worked overtime to make this happen with the top three going live by the middle of this month,” said a senior executive quoted earlier in the story.
While there were some concerns that this could cause severe disruptions, around 70 percent of customers still use banking channels as the primary settlement method. Between banking channels, SI, fintech app Cred and BBPS, almost 95 percent bills are settled.
The banking channels are bank websites and apps, apart from standing instructions for automatic bill payments.
No major disruption
The central bank required all credit card bill payments to be routed through BBPS from July, avoiding any third-party payment route such as fintechs.
However, the credit card bill payment app Cred, which is also the largest player, saw a minimal impact as the fintech uses multiple channels such as Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT) for a large segment of the credit card bill payments made through the app.
The interpretation was that the RBI circular does not say anything about not being able to use authorised clearing houses and hence apps which used IMPS and NEFT need to be discontinued.
Several bankers also felt that the regulator’s restriction is only for bill payments through third-party aggregators like payment gateway as well as bilateral partnerships of banks with fintechs.
Among the other large issuers, the sixth largest issuer RBL Bank is yet to begin the process of integrating the credit card bill payment with BBPS. Others such as IDFC First Bank, IndusInd Bank, Bank of Baroda are also live on the platform.
When BBPS was set up, the RBI’s idea was that all billers could be aggregated on a single platform and it has been highly successful, too. While the regulator cannot restrict a private sector telecom player or a private school to be part of BBPS, it can tell entities that are regulated by the central bank.
Moneycontrol had earlier quoted a senior payment industry executive, who felt that a lot of credit card bill payments are routed through card networking giants Visa’s VisaDirect and Mastercard’s MoneySend and the BBPS mandate could be the central bank’s attempt to reduce the dominance of these two networks in favour of a local bill payment network.
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