The Reserve Bank of India (RBI) on Wednesday announced two major consumer-centric developments that will affect how you make investments, and shop online besides paying bills.
The two changes announced in the monetary policy review include the Unified Payment Interface (UPI) and Bharat Bill Payment System (BBPS). The central bank said the changes will enhance the mandate for UPI payments that will allow single block multiple debit feature.
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The other change is pertaining to BBPS under which customers will be able to pay rent, school fees, tax, and other fees for professional services through the system. Till now, the Bharat Bill Payment system has been limited to recurring bill payments for merchants and utilities.
What does the UPI mandate mean for customers?
The statement on Developmental and Regulatory Policies from RBI released on Wednesday said, “The capabilities in UPI can be enhanced to enable a customer to create a payment mandate against a merchant by blocking funds in his/her bank account for specific purposes which can be debited, whenever needed. This will build higher degree of trust in transactions as merchants will be assured of timely payments, while the funds remain in the customer’s account till actual delivery of goods or services. It has, therefore, been decided to introduce a single-block-and-multiple debits functionality in UPI, which will significantly enhance the ease of making payments in e-commerce space and towards investments in securities. Separate instructions to NPCI will be issued shortly.”
This means customers can create a payment mandate against a merchant by blocking funds in their bank account for specific purposes which can be debited as per needs. Once the UPI customer has consented to block the money in their bank account, the merchant can make multiple debits up to a maximum permitted amount instead of a single payment currently allowed. The mandate will make it easier for customers to keep the money for investment purposes such as buying securities in the stock market, besides the purchase of government securities using RBI’s Retail Direct scheme, e-commerce transactions, and others.
BBPS To Support All Payments And Collections
The scope of the payment system will be expanded to include all categories of payments and collection, both recurring and non-recurring. The regulator has approved all categories of billers — businesses and individuals – to use the payment system.
“It also does not cater to bill payments or collections such as payment of fees for professional services, education fees, tax payments, rent collections, etc.,” Das said while announcing the decisions of the Monetary Policy Committee on December 7, 2022.
Launched in 2017, Bharat Bill Payment System 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.
Akash Sinha, CEO and co-founder, Cashfree Payments, said, “The RBI’s announcement with respect to UPI payments and Bharat Bill Payment System (BBPS) are encouraging in the payments ecosystem. The RBI’s announcement around increasing the capacity of UPI by introducing single-block and multiple debits functionality, will enable users to block funds in their account, which can be debited at the time of need. This will make it more convenient to make payments towards investments in securities through the RBI’s Retail Direct platform and e-commerce transactions. RBI has been working towards boosting the efficiency and effectiveness of BBPS, to facilitate and accelerate the adoption of cashless payments and today’s announcement to expand its scope will further aid in increasing the accessibility for a wider set of individuals and businesses. India, as an economy, has already witnessed a rapid rise in the digital payments, logging 23.06 billion transactions amounting to Rs 38.3 lakh crore in the third quarter this year. RBI’s recent efforts with respect to digital payments will certainly contribute towards the cashless economy imperative.”