Saturday, Dec 02, 2023

RBI Monetary Policy: UPI Will Now Allow Blocking Money For Multiple Debits, BBPS To Include All Payments

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RBI Monetary Policy: UPI Will Now Allow Blocking Money For Multiple Debits, BBPS To Include All Payments

The Reserve Bank of India (RBI) has announced two consumer-centric development updates related to Unified Payment Interface (UPI) and Bharat Bill Payment System (BBPS). Know what those are.

RBI Monetary Policy: UPI Will Now Allow Blocking Money For Multiple Debits, BBPS To Include All Payments
RBI Monetary Policy: UPI Will Now Allow Blocking Money For Multiple Debits, BBPS To Include All Payments Photo: PTI

The Unified Payment Interface (UPI) will now have a single block multiple debit feature and Bharat Bill Payment System (BBPS) will now include a wider variety of recurring and non-recurring payments, said the Reserve Bank of India (RBI) on Wednesday.

Effectively, you will now be able to block funds for your payments through UPI, say, at the beginning of every month. At the same time, BBPS will allow you to make more types of payments, recurring as well as non-recurring.

According to Vishwas Patel, ED, Infibeam Avenues Limited and Chairman of Payments Council of India (PCI), "It is very much needed to enhance the scope of UPI, by not only adding credit cards to it, or allowing to invest in government securities or apply for IPO or enabling UPI on a feature phone, but to allow more and more customer-centric UPI payment solution to benefit the common people and moving them towards digitalization." 

"So, allowing this feature would further boost the economy as people who were usually using cash or UPI for transactions will further use it for their investment needs or travel or hotel booking needs," Patel further added.

Here are the details of the two customer-centric measures taken by the central bank.

UPI Will Now Have The Capability To Block Money For Future Payments

RBI has enhanced the capabilities of UPI to now enable customers to create a payment mandate against a merchant by blocking funds in their bank account for specific purposes which can be debited as per needs.

“It has, therefore, been decided to introduce a single-block-and-multiple debits functionality in UPI, which will significantly enhance the ease of making payments in e-commerce space and towards investments in securities,” said the RBI.

According to RBI, this would be helpful for hotel bookings, purchase of securities in the secondary capital market, besides the purchase of government securities using RBI’s Retail Direct scheme, e-commerce transactions, and others.

Regarding the scope of this feature, RBI said it will help build a higher degree of trust in transactions since merchants will be assured of timely payments while the funds remain in the customer’s bank account till the actual delivery of goods or services.

According to Anant Singhania, president, IMC Chamber of Commerce and Industry, "RBI has now enabled it for Processing Mandates with Single Block and Multiple debits as well. This would be helpful to customers to lock their money for payments at a future date say for example booking of hotel, retail purchase of Government securities and enabling  smoother e-commerce transactions. This will significantly enhance the ease of specific transactions and merchants and offer counter parties the confidence in terms of future payments."

According to Atish Shelar, COO, IppoPay Technologies, a Chennai based payment technology company, "RBI's single block and multiple debit facility will bring more transactions from our day to day lives under UPI sphere. This helps only go deeper in an existing use case of ecommerce where UPI's inroads are strong."

According to RBI, over 70 lakh autopay mandates are handled every month and more than half of Initial Public Offer (IPO) applications are processed using the block feature of UPI.

UPI already has the feature of processing mandates for recurring transactions but only for single block and single debit.

Kunal Mehta, co-founder, Arthan Finance, a Mumbai based loan company, said in a statement, "RBI is putting lot of emphasis on UPI to make sure the entire payment links are well connected and specifically the retail payments are streamlined."

Dr. Jasmin B Gupta, Co-founder & CEO, LXME, a Mumbai based financial services company, said, "With capabilities in UPI further enhanced by introducing single block and multiple debits functionality, making payments in e-commerce space and for investments in securities will become easy."

Mandar Agashe, Founder, MD and vice chairman, Sarvatra Technologies limited, said, "The merchants will get assured timely payments, while the customers can pay by blocking the amount in their account, i.e. there is a commitment to pay but the actual amount will be transferred when the actual goods are delivered. In fact, we may see many customers who would prefer cash on delivery, use UPI mandates for payments, in the coming months."

Bharat Bill Payment System (BBPS) Will Now Support All Payments And Collections

At present, BBPS does not support non-recurring payments or collection requirements of individuals even if they are recurring in nature. For example, professional service fee payments, education fees, tax payments, rent collections, and other payments or collections remain outside the purview of BBPS.

RBI has now decided to expand the scope of BBPS to include all categories of payments and collections, both of recurring and non-recurring nature.

According to RBI, the new feature will make the platform accessible to a wider set of individuals and businesses who can benefit from the transparent and uniform payments experience, faster access to funds and improved efficiency. 

BBPS is an interoperable platform operated by National Payments Corporation of India Bharat BillPay Limited (NBBL) launched in 2017. What this platform does is facilitate different bill payments needs of consumers and merchants.

In the last MPC meeting, RBI announced various improvements to the BBPS system namely, in-bound cross-border bill payments, others.

According to Sony A, general manager and CIO, South Indian Bank, for B2B payments, BBPS now offers a seamless and transparent payment option, faster access to funds and improved efficiency. This will be beneficial for the business community to have a standardized and reliable system for their invoices/bill payments. Under B2B category, banks can onboard their corporate customers like manufacturers, distributors etc. as BBPS-billers and enable buyers to pay through BBPS enabled channels.

"Opening up recurring payments across all the biller categories adds convenience to customers to easily ensure the timely payments of all their bills in an automated manner without customer intervention at each bill payment frequency," Sony A of South Indian Bank further added.

"By including both the recurring and non recurring payments within the ambit of BBPS, the platform is accessible to a wider set of individuals and business who can be immensely benefited. This may also help the Bank to provide wider gamut of services through this platform which can increase the CASA for the Bank," Singhania further added.

"The new enhancements will make the platform more accessible to a wide range of customers as well as businesses. The initiative will help individuals and businesses to make a plethora of payments through BBPS in a faster and more efficient manner. Bharat Bill Payment System has become an essential part of rural economy and will continue to have a significant impact in driving last mile connectivity in the coming years," said Dilip Modi, founder, Spice Money, a rural India focussed FinTech company.

"The pandemic-induced lockdowns led to a surge in the usage of digital bill payment modes for all kinds of utilities including water, gas, electricity, telephone bills etc. The RBI’s decision to enhance the scope of BBPS platform to include all kinds of payments and collections, both recurring and non-recurring, will ensure the accessibility of the platform to a wider set of audience including rural India," said Rajesh Mirjankar, MD & CEO, Kiya,ai, a Mumbai based FinTech company in a statement.