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Explained: What are the RBI’s new rules for paying credit card bills through Bharat Bill Payment System?

Explained: What are the RBI’s new rules for paying credit card bills through Bharat Bill Payment System?

RBI Mandates New Credit Card Bill Payment System: Effective July 1, the Reserve Bank of India (RBI) has made it mandatory for all banks to process credit card bill payments through the Bharat Bill Payment System (BBPS). The move tightens regulations and is aimed at centralizing and streamlining the bill payment process across India.

According to an ET report, 12 banks are currently operational on BBPS for credit card bill payments. Major players such as HDFC Bank, Axis Bank, Yes Bank and IDFC First Bank are still in various stages of integration. This shift is expected to bring about significant changes in the way banks and payment apps process credit card transactions.

What is Bharat Bill Payment System (BBPS)?
Developed by the National Payments Corporation of India (NPCI), BBPS is a unified platform designed to process all forms of bill payments across the country. The RBI’s directive to route all credit card bill payments through BBPS is aimed at enhancing security, reducing fraud and standardizing grievance redressal procedures.

By mandating that all payments from credit card accounts be routed through BBPS, the RBI aims to bring a higher level of security and control over these transactions. Currently, payments through apps are typically handled through Immediate Payment Service (IMPS) or directly with the bank. The new regulations will ensure that all such transactions flow through the centralised BBPS network.

From a consumer perspective, the change will be largely seamless. Currently, consumers can pay their credit card bills via direct debit, net banking (NEFT or IMPS) or third-party apps. After July 1, while backend processing will shift to BBPS, the frontend experience for consumers will remain largely unchanged. Services offered by apps like Cred, Amazon Pay and PhonePe will continue through their individual payment settlement channels until all banks go live with BBPS.

The real challenge lies with the banks that are not yet integrated with BBPS. Once banks like Axis and HDFC go live with BBPS, the backend channels for payment processing will shift. This transition may initially create some integration issues for these banks, but in the long run, it is expected to streamline and standardize credit card bill payments.