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Sunday, July 26, 2020

Tango between UPIAutoPay and BBPS – ‘Pigmy Deposits’ Collection Module for Utility Bills, Loan EMIs


            Semi- Inspiration for this Post – Syndicate Bank Pigmy Deposit Scheme

            Syndicate Bank adopted the concept of Pigmy bank to assist its customers to grow their pot of savings. Over the decade's Syndicate Bank had stupendous success in its PigmyBank Scheme and was adopted by numerous financial institutions across the world.

It was in 1928, that Syndicate Bank introduced the innovative savings scheme 'Pigmy Deposits', to mobilize small savings. This scheme led Syndicate Bank to be known as the `Small Man's Big Bank'.

In simple terms, under the ‘Pigmy Deposits’ Recurring Deposit scheme, Pigmy agents visit the doorsteps of the depositors to collect the daily deposit.

The deposit could be as little as INR5/-.


Quote

As another Mint columnist wrote in a fabulous column titled Before Thaler there was Pai, “The testimonies of some of the pigmy depositors shows this emphatically. One woman fainted upon hearing the amount of saving, another asked Pai not to inform her husband about the savings and yet another built a house using the savings, calling it Pigmy House."

Unquote

The same concept can be adopted to lessen the pain of payment of Utility Bills, Loan EMIs or any biller on the BBPS platform.

The Process flow:

A)     Subscriber opts for the BBPS UPIAutoPay module in his/her APP

B)     Subscriber chooses the BBPS Biller, inputs his/her Biller identification number, inputs the monthly saving amount, daily saving amount, and VPA

C)     Subscriber inputs the payment date i.e Bill Due Date LESS 2 days or 3 days

D)     The UPIAutoPay process kicks in.

E)      The collection process i.e Debit Subscribers Bank’s Account – Credit Subscribers Virtual Collection Account, via UPIAutoPay, takes places on the scheduled days i.e Daily/Bi-Weekly/Weekly etc.

F)      Once the payment is made to the BBPS Biller, the payment receipt be shared to the subscriber.


Mandatory Requirements:

01)  BBPS Biller to accept partial payments.

02)  Dedicated Helpdesk by the BBPS Biller to resolve any issues

03)  Narration – Subscribers Bank Account for the UPIAutoPay transaction ___ BBPS Biller Name / Identification Number / Virtual Account Provider Name

 

Quick FAQs

Q) Who can offer this facility?

Ans: Any RBI recognized PPI Issuer

Q) What should be service charges for this facility?

Ans) Reasonable, say INR 50/- to set up the one Virtual Collection Account. INR10/- maintenance fee + MDR per virtual collection account, per month. Basically, it will depend on the business plan of the offering institution. Reward points can be the sweetener.

Q) Should the subscriber be allowed to break a respective virtual collection account.

Ans) Ideally no, to minimize such thoughts, penalty charges can be levied to break the virtual collection account

There will be teething issues, however over a period of time, as the participants mature, this will benefit the whole ecosystem.

Additional Reading Material

01)  Syndicate Bank relaunches Pigmy collection scheme @ https://www.oneindia.com/2007/03/01/syndicate-bank-relaunches-pigmy-collection-scheme-1174137440.html

02)  UPI 2.0: The digital pigmy @ https://www.livemint.com/Opinion/YtRDoDK913EfV25iIDvTWI/UPI-20-The-digital-pigmy.html

03)  Should UPI (Unified Payments Interface) take lessons from Syndicate Bank’s pigmy deposit scheme? @ https://mostlyeconomics.wordpress.com/2018/01/03/should-upi-unified-payments-interface-take-lessons-from-syndicate-banks-pigmy-deposit-scheme/

04)   


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