Banks are operating normally, Cred, even though the BBPS deadline for paying credit card bills is drawing close

Cred is unlikely to be much impacted since the fintech has given banks the ability to pay credit card bills via NEFT and IMPS in addition to BBPS.

There is no effect of BBPS on credit card payments.

The RBI's directive to end bilateral partnerships for credit card bill payments starting in July is not seen negatively by the majority of large banks since over 70% of clients still utilize banking channels as their principal means of settlement.

The banking channels include of bank websites and applications, in addition to preset programs for automated bill payment.

Beginning in July, the central bank mandated that all credit card bill payments be made via the Bharat Bill Payments System (BBPS). Standing instructions (SI) for automatic deductions and payments established via banking channels are unaffected by this.

The fintech company Cred, which facilitates credit card bill payments via various channels including Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT), is expected to have negligible effects from the credit card bill payment app.

According to a senior banker close to the regulator who wished to remain anonymous, "roughly 95% of credit card bill payments are settled between banking channels, outstanding instruction, Cred and BBPS, which ensures there will are going to be hardly any disruption in bill payments."

According to the banker, almost 80% of credit card bills are paid with Cred outside of standing orders and banking channels.

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The banker said, "I don't think SIs, internet banking, mobile banking, and channels which use IMPS and NEFT need to be discontinued because the RBI circular does not say anything about not being able to use authorized clearing houses."

Only bill payments made via third-party aggregators, such as payment gateways, and bilateral bank-fintech partnerships—such as those used by PhonePe and Amazon Pay—are subject to the regulator's prohibition. These arrangements are expected to be affected by the RBI's directive.

Others do not agree with this view. According to a senior banker, the RBI plans to centralize bill payments and only allow payments via bank websites and apps; all other payment methods would need to be processed through BBPS.

According to the creator of a fintech software that allows users to pay credit card bills online, the RBI's goal is sufficiently obvious and cannot be misunderstood, and banks must abide by the regulations until they are expanded. The creator said, "Therefore, no one can offer the service until the banks decide to make their credit card repayment application programming interfaces (APIs) available under BBPS and if the June-end deadline stays put."

The RBI's concept, which has proven to be quite effective, was to combine all billers into a single platform when BBPS was established. Although the regulator cannot prevent a private school or telecom company from participating in BBPS, it may advise organizations under central bank regulation.

Big banks are not yet prepared

Together, the largest credit card issuers in the nation, including SBI Cards, HDFC Bank, ICICI Bank, and Axis Bank, own almost 80% of the market. Since these banks are not yet operational on BBPS, there are worries regarding potential consumer annoyance.

"We are hoping that the RBI will extend the deadline. A few system APIs need to be connected with BBPS, and it is doubtful that they will be completed by the end of September. A few more months will pass before the BBPS integration is completed. In any case, the majority of credit card users are aware of how to make payments via banking channels, according to the head of credit cards at a large private bank.

Certain major credit card issuers are active on the BBPS system, including Federal, Canara, IDBI, IndusInd, Kotak Mahindra, and Bank of Baroda. The process has begun, and ICICI Bank and Axis Bank plan to go operational shortly.

Large bill amounts sometimes occur, and using credit cards for payments raises anti-money laundering issues. Nonetheless, money is put in banks and bill payments are resolved via them. According to the head of digital at a private sector bank, this should have been left up to the banks to determine how they wanted to handle it.

According to a senior industry executive in the payment sector, a significant portion of credit card bill payments are processed by Visa's VisaDirect and Mastercard's MoneySend. This suggests that the central bank is attempting to counterbalance the dominance of these two networks by promoting a local bill payment network.