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What is Bharat Bill Payment System (BBPS)?

Bill payments is an important, recurring, and at times a tedious task. But Bharat Bill Payment System (BBPS) has made it easier by offering ‘anytime anywhere’ bill payment solution.

What is Bharat Bill Payment System (BBPS)?

Bharat Bill Payment System (BBPS) is an integrated bill payment system in the country offering interoperable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment.

Who are the participants in BBPS?

The BBPS consists of two types of entities –

  1. Bharat Bill Payment Central Unit (BBPCU) – is the single authorized entity operating the BBPS. The BBPCU sets necessary operational, technical, and business standards for the entire system and its participants, and also undertake clearing and settlement activities.
  2. Bharat Bill Payment Operating Units (BBPOUs) – are the authorised operational units working in adherence to the standards set by the BBPCU. While there is a single BBPCU, there can be multiple BBPOUs operating under the BBPS.

Who can be BBPCU?

The BBPCU needs to be a Section 25 company under the Companies Act, 1956 (amended to Section 8 of the Companies Act, 2013), having professional senior management and experience in handling central infrastructure in payments, clearing and settlement, and transaction processing. 

Accordingly, the National Payments Corporation of India (NPCI) has been authorized as the BBPCU to implement the BBPS.

Who can be BBPOUs?

Both banks and non-banks catering to the requirements of bill payments as well as aggregation of payment services can be BBPOUs.

Banks which are desirous of operating as BBPOUs need to obtain approval from Reserve Bank of India (RBI) under the Payment and Settlement Systems Act, 2007.

The eligibility criteria for non-bank entities seeking to operate as BBPOUs is as follows –

  1. The entity should be a company incorporated in India and registered under Companies Act, 1956 / Companies Act, 2013.
  2. The Memorandum of Association (MOA) of the applicant entity must cover the proposed activity of operating as a BBPOU.
  3. The applicant shall have a net-worth of ₹25 crore at the time of application for authorisation and the same shall be maintained at all times thereafter.
  4. The company must have domain experience in the field of bill collection / services to the billers, and relevant experience in transaction processing for at least 1 year.
  5. The entity must seek authorization under the Payment and Settlement Systems Act, 2007 from RBI for its operations.

What are ON-US and OFF-US transactions?

The nature of transactions is classified into ON-US (the biller and payment collecting agent belong to same BBPOU) and OFF-US (the biller and the payment collecting agent belong to different BBPOUs) transactions.

BBPOUs takes care of ON-US transactions. BBPCU handles all the OFF-US transactions reported by all BBPOUs and arrive at appropriate settlement for each biller across various BBPOUs. The BBPCU arranges to instruct the settlement bank to make pay-outs to respective billers’ banks for credit to billers’ accounts.

Which billers are included under BBPS?

BBPS includes all categories of billers which raise recurring bills as eligible participants, on a voluntary basis.

Now, even a person staying outside India can make payments to billers in India through BBPS under the Rupee Drawing Arrangement (RDA) – ‘Direct to Account’ Facility.


References

Reserve Bank of India. (2014, November 28). 'Implementation of Bharat Bill Payment System (BBPS) - Guidelines (Updated as on May 26, 2022)'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9368&Mode=0

Reserve Bank of India. (2021, June 14). 'Bharat Bill Payment System – Addition of Biller Category'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12113&Mode=0

Reserve Bank of India. (2022, September 15). 'Rupee Drawing Arrangement - Enabling Bharat Bill Payment System (BBPS) to process cross-border inbound Bill Payments'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12386&Mode=0


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