RBI Permits ‘On-Tap’ Authorisation For Retail Payment Systems

The Reserve Bank of India has decided to open up retail payment systems to more players to encourage innovation and competition, while minimising risks in the sector.

The central bank has decided to extend on-tap authorisation to entities for three retail payments systems—Bharat Bill Payment Operating Units, Trade Receivables Discounting Systems and White Label ATMs, it said in a statement today.

The move follows feedback received by the RBI after it published a policy paper on authorising new retail payment systems to minimise concentration risks in the industry.

Bharat Bill Payment Operating Units is an online bill payment system for utilities that supports multiple payment modes. There are 67 customer BBPOUs, 21 biller BBPOUs and 134 registered entities—including water, telecom, gas and electricity service providers, as of July 15—according to the National Payments Corporation of India's website.

Customer BBPOUs are those banks and non-banks authorised by the RBI to directly liaise with customers and offer payment processing modules for monthly bill payments. Biller BBPOUs are those banks and non-banks authorised by the RBI to build bill-payments tools for utility and service providers. The difference between these two BBPOUs lies in whether banks and non-banks can decide whether to offer Bharat bill payment services directly to customers or billers.

TreDs is an online bill discounting platform targeting micro, small and medium enterprises to raise funds and process payments quickly for trade receivables with their customers.

Currently, there are three TreDs platforms in operation.

White Label ATM operators are non-banking entities that are licensed to setup and operate ATM networks across the country. There are eight such entities operating in India presently.

While banks are shutting their non-branch ATMs, effectively opening up locations for white-label operators to expand their network, ATM interchange fee remains lower than optimal, forcing many companies to seek other lines of revenue.

The RBI this year set up a committee, comprising members from banks, ATM and payments industry, to review ATM interchange fee structure.