SUMMARY
The government may ask the Indian Banks' Association and NPCI to act against players charging fees for BBPS transactions: Report
Like UPI, the concerns of service providers for cost recovery for BBPS transactions have to be met through other means, an official was quoted as saying
PhonePe and Paytm, the two major players in the BBPS ecosystem, have reportedly stopped charging fees for payments
The Indian government reportedly wants to keep electronic transactions under the Bharat Bill Payment System (BBPS) free of cost.
The government may direct the Indian Banks’ Association (IBA) and the National Payments Corporation of India (NPCI) to take a review of the players acting otherwise and act against them, a government official aware of the matter told the Economic Times.
“The concerned authority has already issued an order. IBA can take a further review and suggest course correction if required,” the official was quoted as saying.
BBPS is a one-stop destination for making payments of recurring utility bills like telcom, electricity, gas, insurance payment, among others. Some of the payment modes in BBPS include UPI, Aadhar Enabled Payment System (AEPS), and NEFT.
The development comes within a week after Finance Minister Nirmala Sitharaman said that it was not the right time to make digital payments like UPI chargeable. She also stated that keeping access to digital payments free would enhance the Indian economy.
Following the release of a discussion paper on “Charges in Payment Systems” by the Reserve Bank of India, there were speculations that the government was considering levying fees for UPI transactions. However, Sitharaman quashed such rumours saying that there was no such proposal under consideration.
The finance minister also noted that the concerns of the service providers for cost recovery have to be met through other means. The official told the publication that the same is also applicable in the case of BBPS.
Some payment apps had reportedly started charging fees for bill payments through BBPS last month. Following this, the NPCI directed the players to stop charging fees.
PhonePe and Paytm, the two major players in the BBPS ecosystem, have reportedly stopped charging fees.
“As per the directions of NPCI, we immediately stopped charging platform fees on Paytm for the billers on BBPS,” a Paytm spokesperson was quoted as saying. The spokesperson added that the platform was charging a fee as an experiment on a limited set of customers.
Meanwhile, a Phonepe spokesperson told the publication that NPCI is considering whether it should introduce a standardised platform fee at an ecosystem level and the company would await guidance on the same.
“BBPS billers and their related charges are governed by BBPS guidelines. There are some categories that we operate in which are either not present on BBPS, or they have limited biller coverage. In which case, we have separate commercial arrangements,” the spokesperson was quoted as saying.
Last month, the RBI also proposed to enable BBPS to accept cross-border inward payments, allowing non-resident Indians to pay bills through the platform.
While the government seems to be clearly against charging users for digital payments, it remains to be seen how much Merchant Discount Rate (MDR) is charged once credit card payments are enabled through UPI.
