Baba’s Explainer – Bharat Bill Payment System (BBPS)

  • IASbaba
  • January 20, 2023
  • 0
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  •  GS-3: Science and Technology- developments and their applications and effects in everyday life.
  •  GS-3: Indian Economy & Development

Context: While a reasonable chunk of billers and utility providers are covered under BBPS, the RBI Governor said the platform will be extended to all payments and collections, including those that are non-recurring, such as professional service fee, tax collection and rent payment.

What is the Bharat Bill Payments System?
  • The Bharat Bill payment system is a Reserve Bank of India (RBI) conceptualised system driven by National Payments Corporation of India (NPCI).
  • It is a one-stop ecosystem for payment of all bills providing an interoperable and accessible “Anytime Anywhere” Bill payment service to all customers across India with certainty, reliability and safety of transactions.
  • In short, we can say that BBPS is an interoperable platform for recurring bill payments operated by the National Payments Corporation of India (NPCI).
  • It offers interoperable bill payment service to customers online as well as through a network of agents on the ground.
  • The system will provide multiple payment modes and instant confirmation of payment.
  • It was piloted in 2016 and went live a year later. By 2019, BBPS onboarded all recurring payments.
  • Bharat Bill Payment System is offering one-stop bill payment solution for all recurring payments with 200+ Billers in the categories Viz. Electricity, Gas, Water, Telecom, DTH, Loan Repayments, Insurance, FASTag Recharge, Cable etc. across India.
  • The payments solution is aimed at making bill payments a round-the-clock option and in any mode .
  • An effective mechanism for handling consumer complaints has also been put in place to support consumer regarding any Bill related problems in Bharat BillPay
Who are the stakeholders in the BBPS ecosystem?

There are two key components in the BBPS system

  • Bharat Bill Payment Central Unit (BBPCU)
    • National Payments Corporation of India (NPCI) has been authorized by RBI as the Bharat Bill Payment Central Unit (BBPCU) and is responsible for setting business standards, rules and procedures for technical and business requirements for all participants.
    • The BBPCU undertakes clearing and settlement activities related to transactions routed through Bharat BillPay.
  • Bharat Bill Payment Operating Units (BBPOUs)
    • Bharat Bill Payment Operating Unit aka BBPOU is the entity that is authorized by Reserve Bank of India.
    • It can be a Bank or a Non-Bank that handle the payments load by adhering to the rules set by BBPCU.
    • BBPOU may choose to integrate either with the customers, (COU: Customer OU) or with the billers (Biller OU) or may wish to participate as both
  • Agents
    • Agents are the customer touch points and service points in the Bharat BillPay ecosystem available in the form of agent outlets, Business Correspondent outlets, Bank branches, collection centres, retail outlets.
  • Biller/Utility Company
    • Service providers, who shall receive payments from customers for services rendered. By participating in the Bharat BillPay scheme, the biller will be able to receive payments from third party channels for the services provided to the customer. A biller may tie up with up to two BBPOUs to access the entire universe of its consumers and all payment channels.
Why is BBPS considered as revolutionary in Payment industry?

Following can be considered as key features of BBPS which are also its advantages:

Interoperable Bharat BillPay is an integrated ecosystem connecting banks and non-banks in bills aggregation business, Billers, payment service providers and retail Bill outlets.
Accessible Facilitate seamless payment of bills through any channel : Digital and physical. BBPS is payment mode agnostic. It supports IMPS, NEFT, UPI, cheques, wallets and even cash.


For instance, if a gas bill has to be paid in cash, the website provides the nearest BBPS collection point. You pay cash to the person at the counter of Collection point and a receipt is generated. It acts as a one-point-stop for all bill payments. Cheques can also be remitted through these agents.

Cost-effective Most cost-effective for entire ecosystem – Flat fee charge vs current ad valorem.
Integration BBPOUs will have to connect only to BBPCU to get access to all the billers. Utility companies just need to connect to maximum two BBPOUs to enable all customers to pay bills.


But note, that BBPS is only a platform. If a transaction has a settlement duration of T+1 or T+2, as with UPI or cheque payments, BBPS cannot bypass the time taken for payment processing. It only facilities in making and concluding a payment in a common platform

Complaint Management Standardised system to handle customer grievances for both ON-US and OFF-US transactions.
Dispute Management Facilitate BBPOU’s to raise and resolve disputes relating to transactions that have passed through the Bharat BillPay ecosystem.
Clearing & Settlement Multiple Clearing & Guaranteed Settlements between different parties, standardised TAT.
Standardisation Standardisation of processes for entire Bharat BillPay ecosystem.
Brand Connect Single and trusted brand connect and Bharat BillPay Assurance.
What is NPCI?
  • NPCI, an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
  • It is a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.
  • The ten core promoter banks are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC.
  • In 2016 the shareholding was broad-based to 56 member banks to include more banks representing all sectors.
How has the growth in BBPS been over the years? How many users transact on the platform?
  • There are 33 active BBPOU billers and 66 BBPOU customers. This covers most banks and large NBFCs, particularly those relevant for payments.
  • There are 19 categories of billers, which include electricity, insurance, water, and municipal taxes, piped gas, housing societies, credit cards, loan repayments and prepaid mobile phone cards.
  • As of November, there are 20,519 live billers (or utility providers) listed in BBPS.
  • Though BBPS is not widely spoken about yet, the quantum of transactions has risen multi-fold in four years.
    • From April to November of FY23, BBPS processed ₹1.22-lakh crore or 689.63 million (in volume) transactions.
    • Compared to FY18’s load of ₹9,099.3 crore (73.39 million) transactions, this is an exponential leap.

Main Practice Question: How is RBI & NPCI heralding payment revolution in India? Discuss with examples.

Note: Write answer his question in the comment section.

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