To significantly enhance the ease of making payments through unified payment interface (UPI) for investments in securities, the Reserve Bank of India (RBI) has decided to introduce single-block and multiple-debits functionality. Similarly, expanding the scope of the Bharat Bill Payment System (BBPS), the central bank has allowed it to carry out all categories of payments and collections, both recurring and non-recurring, and for all categories of billers, like businesses and individuals.
In his monetary policy statement, RBI governor Shaktikanta Das says, "The capabilities in UPI will be further enhanced by introducing single-block and multiple-debits (SBMD) functionality. This facility will enable a customer to block funds in her account for specific purposes, which can be debited whenever needed. This will significantly enhance the ease of making payments for investments in securities, including through the retail direct platform and e-commerce transactions."
At present, UPI can process payment mandates for recurring as well as single-block-and-single-debit transactions. Over 7mn (million) autopay mandates are handled monthly in the network and more than half of initial public offering (IPO) applications are processed using the block feature of UPI.
According to RBI, enhancing the mandate for UPI to process single-block and multiple-debits would be helpful for hotel bookings, purchasing securities in the secondary capital market and purchasing government securities using RBI's retail direct scheme and e-commerce transactions.
"This will build a higher degree of trust in transactions as merchants will be assured of timely payments while the funds remain in the customer's account till the actual delivery of goods or services. Separate instructions to the National Payment Corp of India (NPCI) will be issued shortly," RBI says.
The single-block-and-multiple debit in UPI will make the process of making payments more effortless and organised, says Manish P Hingar, founder at Fintoo. "Additionally, merchants will receive significant assurance of timely payments while the customer still holds his fund in his account until the actual delivery. This will create ease in the commerce space for making payments in a regularised manner," he says.
According to Krishnan Vishwanathan, founder and executive director of RING, the new announcement (by RBI) completely democratises UPI for credit and debit payments, removing any gaps in making it the preferred choice of payment for every purchase. He says, "Perhaps the most pivotal aspect of today's announcement is the integration of single-block-and-multiple-debits (SBMD) within the UPI framework. Essentially, SBMD allows users and merchants to decide on a certain limit to which a credit card may be authorised, making it convenient for customers and giving confidence to merchants."
"Now that UPI is capable of similar services, it is poised to increase its reach considerably, making it the most popular mode of payment in the near future, in line with RBI's vision. This almost puts UPI at par with a traditional credit card," he added.
BBPS, an inter-operable platform operated by NPCI Bharat BillPay Ltd, was launched in 2017. Currently, it handles recurring bill payments for merchants and utilities and does not cater to non-recurring bills. It also does not cater to bill payments or collections such as payment of fees for professional services, education fees, tax payments, and rent collections for individuals, even if they are recurring.
"...the scope of BBPS is being enhanced to include all categories of payments and collections, both recurring and non-recurring, and for all category of billers, businesses and individuals. This will make the BBPS platform accessible to a wider set of individuals and businesses who can benefit from the transparent payments experience, faster access to funds and improved efficiency. Separate guidelines will be issued to NBBL in this regard," Mr Das says.