Starting July 1, 2024, the Reserve Bank of India (RBI) will enforce a new regulation requiring all credit card bill payments to be routed through the Bharat Bill Payment System (BBPS).

This move is set to significantly impact major fintech companies such as PhonePe, Cred, BillDesk, and Infibeam Avenues, as well as several banks that have not yet integrated with BBPS. In this article, we will explore the details of this regulation, its implications for the financial industry, and the current state of compliance among banks and fintechs.

The New RBI Regulation

Centralized Billing Network Requirement

The RBI has directed that from July 1, all credit card payments must be processed through the BBPS. This centralized billing network is intended to streamline credit card bill payments, providing the central bank with better oversight and control over payment trends and fraudulent transactions.

Non-Compliant Banks

As of now, several major banks, including HDFC Bank, ICICI Bank, and Axis Bank, have not activated BBPS for credit card bill payments. Collectively, these banks have issued over 5 crore credit cards, and their non-compliance means that fintechs already integrated with BBPS, such as PhonePe and Cred, will be unable to process credit card payments for these banks’ customers after June 30.

Extension Request by the Payments Industry

Given the significant changes required to comply with the new regulation, the payments industry has requested a 90-day extension to the deadline. This extension would provide banks and fintech companies with additional time to integrate their systems with BBPS and ensure seamless operation post-June 30.

Current Compliance Status

Banks Integrated with BBPS

According to the Economic Times report, only eight out of the 34 banks authorized to issue credit cards have activated bill payments on BBPS. These banks include:

SBI Card
BoB Card
IndusInd Bank
Federal Bank
Kotak Mahindra Bank

Banks Yet to Comply

Prominent banks such as HDFC Bank, ICICI Bank, and Axis Bank have not yet activated BBPS, posing a significant challenge for fintech companies that rely on these integrations to process credit card payments.

Impact on Fintech Companies

PhonePe and Cred

PhonePe and Cred, among other fintechs, will be directly affected by this regulation. As members of BBPS, they will be unable to process credit card payments for non-compliant banks’ customers starting July 1. This disruption could potentially impact their user base and transaction volumes.

BillDesk and Infibeam Avenues

Similar to PhonePe and Cred, BillDesk and Infibeam Avenues will also face challenges in processing credit card payments for non-compliant banks. These fintechs will need to work closely with banks to expedite the BBPS integration process to minimize service disruption.

Why Has RBI Mandated Centralized Payment of Credit Cards?

Enhanced Visibility and Fraud Prevention

The RBI’s mandate aims to provide better visibility into payment trends and improve the ability to track and resolve fraudulent transactions. By routing all credit card bill payments through a centralized system like BBPS, the RBI can ensure greater transparency and oversight, ultimately leading to a more secure and efficient payment ecosystem.

Industry Response and Future Outlook

Request for Extension

The payments industry has voiced concerns about the tight deadline and has requested an extension of 90 days. This additional time would help banks and fintech companies adapt to the new requirements and ensure a smooth transition to the centralized billing network.

The Path Forward

As the July 1 deadline approaches, it is crucial for non-compliant banks to expedite their integration with BBPS. The cooperation between banks and fintech companies will be essential to navigate this regulatory change effectively. The successful implementation of this regulation will not only enhance the security and transparency of credit card payments but also strengthen the overall financial infrastructure in India.