Come July 1, a significant change in how credit cardholders pay their bills is expected. Holders of major credit cards issued by HDFC Bank, ICICI Bank, and Axis Bank will be unable to use third-party apps like CRED, PhonePe, Amazon Pay, and Paytm for bill payments. The reason behind this disruption is the Reserve Bank of India’s (RBI) recent mandate requiring all credit card bill payments made through third-party apps to be processed through the National Payments Corporation of India’s (NPCI) Bharat Bill Payment System (BBPS).
However, if you hold a credit card from banks like SBI, Bank of Baroda, Kotak Mahindra Bank, IndusInd Bank, Federal Bank, Canara Bank, RBL Bank, and AU Small Finance Bank, you don’t need to worry. These banks are already live on the BBPS platform, allowing their customers to continue using third-party apps for bill payments.
The issue arises from the fact that major credit card issuers like HDFC, ICICI, and Axis Bank are not yet live on the BBPS platform to receive credit card bill payments. This situation has caused concern among credit cardholders who rely on these third-party apps. Of the 34 banks authorized to issue credit cards, 26 are yet to become active on BBPS.
While credit card users of major banks won’t be able to utilize third-party apps for bill payments, they can still make payments through their issuing banks’ websites, net banking, and bank apps. Experts involved in the credit card industry assure that this situation is temporary, and all banks are expected to activate BBPS for accepting credit card bill payments through third-party apps within a few months.
However, the Payments Council of India (PCI), the body representing the payments industry, has requested the RBI to extend the deadline for BBPS compliance by 90 days to avoid any service disruptions. Considering that HDFC Bank, ICICI Bank, and Axis Bank alone have issued over 50 million credit cards in the country, the potential impact of this disruption is significant. Users have taken to social media platforms like X (formerly Twitter) to express their concerns, urging the RBI to extend the deadline to prevent bill payment disruptions.
The RBI’s decision to centralize bill payments through BBPS stems from its desire to gain a comprehensive view of payment trends and enhance fraud detection and control. However, the move has sparked debate regarding user convenience and the role of third-party apps in the payment ecosystem.
Unlike standard credit card transactions, payments made through third-party apps involve apps like CRED settling the amount to the bank through NEFT/IMPS or a direct transfer. The RBI, according to experts, prefers a centralized platform for these transactions to ensure transparency and control.
Users on social media platforms have expressed their concerns regarding the potential impact on user experience and the government’s desire for increased oversight.
The move comes on the heels of the RBI’s crackdown on peer-to-peer (P2P) credit card payments made via third-party apps. This action was prompted by instances where customers used their credit cards to pay rent and tuition fees through these apps.
The implementation of BBPS for credit card bill payments represents a significant shift in the payment landscape, with potential implications for both consumers and the financial industry.
