In a move that will eliminate queues for bill payment across the country, Reserve Bank of India (RBI) proposes to put in place an Indian Bill Payment System (IBPS) platform which allows consumer to pay any bill in banks, post offices or ATMs and get instant proof of payment.
Today, a large section of the upper middle class has managed to escape the pain of waiting in queues because of arrangements that billers have with aggregators. But over 90% of bill payments in India continue to be made at collection counters by cheque and cash. To enable these consumers a more efficient way of payment, RBI had constituted a committee to study the feasibility of 'Giro' based payment system in India. Giro refers to payment instructions initiated by the payer as against transactions where the decision to deposit the cheque is taken by the recipient.
The proposals do not merely get banks to be collection agents, they aim to standardize billing across the country and make it simple for billers to plug in their billing systems into banks so that payments are updated automatically. The other fallout of this move would be on aggregators and intermediaries who have created a business model around facilitating bill collections. Although aggregators will be allowed to link to the IBPS initially, RBI has said that eventually billers can directly plug into the system, eliminating the need for the intermediaries or aggregators.
"A majority of the consumers either have no access to the internet or are still wary of using this option to pay their bills. The transaction volume in electronic clearing service (ECS) has been growing at about 5% per year in the last couple of years and was 165 million in 2011-12. These volumes are still insignificant in comparison to the total billing volumes of the country. Hence, the vast majority continues to depend on visits to different customer service outlets for payment of each bill which is neither efficient nor providing convenience to the customer," a report said.
Besides making life easier for consumers, the IBPS would greatly improve collection efficiencies of government utilities such as electricity distribution and telecom companies and significantly bring down cost of collections.
"Bill payments form a major component of all retail payment transactions. For the purpose of bill payments, bills could include not only the bills generated by the utility services providers but any payment on demand service like school/university fees, examination fees, government payments, pre-paid cards top-up, and mobile phones recharge, among others," the report said.