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)   

Corporate Bill Pay Module – The need of the hour

Bull's eye: All corporates paying more than 100 Utility Bills every month, subscribe to a ‘Corporate Bill Pay Module’, for payment to any BBPS enabled Biller.

The keyword is BBPS enabled Biller and Payments.

This post is not about ‘Collection’. This post is about ‘Payment’.

Utility Bills are

01) Electricity Bills

02) Water Bills

03) Landline Bills

04) Taxes

Or, any Biller on the BBPS Platform.

The corporate can choose to pay to any Biller on the BBPS as per their internal policies.

Why ‘Corporate Bill Payment Module’?

01) Eliminate the need to manually track the bills across locations spread across geographical boundaries.

02) Efficient management of cash flows. The Bills can be paid just 2 days before the Due Date

03) Visibility of all Utility Bills in a single window

04) Corporates can analyze the bill payments pattern, and take steps to bring down the expenses

05) On successful payment of a few bills, the whole process can be automated with minimal human intervention

06) Alternate sources of data for corporate analysis by Banks or Finance companies

07) As payment is made to BBPS Billers only, no fear of fraudulent payments

 

‘Corporate Bill Payment Module’ can be part of Banks Corporate Net Banking Portal or the specialized Cash Management Services Portal or both.

Features of ‘Corporate Bill Payment Module’

A)     Set Limit for Main Bank Account

B)     To be able to set up Multiple Virtual Accounts

C)     API To ‘Fetch Bills’, from the BBPS Server

D)    Ability to differentiate between ‘Bill Date’, and ‘Bill Due Date’.

E)     Alerts facility in case bills are not settled at Bill Due Date Less 2 Days

F)      Holiday Marking

G)    Analytics  

 

Virtual Accounts

The concept of Virtual Accounts is very common in Cash Management Module. The same concept can be adopted for the bank accounts tagged to CBPM

Virtual accounts are a set of off-balance transaction accounts linked to a physical bank account, used for improved reconciliation.

Virtual accounts reduce the need for multiple bank accounts and associated risks.

Eg: Main Account Nomenclature – Corporate Bill Payment Account

Virtual Accounts can be numerous, such

·         Electricity Bill Payment Account

·         Water Bill Payment

·         Landline Bill Payment Account

·         Municipal Taxes Payment Account

·         Miscellaneous Payment Account

Narration in the Main Bank Account – The narration should be crisp and easy to reconcile.

·         Sample Narration in Main Bank Account – EBPA (stands for Electricity Bill Payment Account / CC (Cost Centre) / Biller Name / Bill Number

·         Sample Narration in the Virtual Account – CC Number / CC Name / Biller Name / Bill Number / Bill Due Date

MIS Reports be configured as per the corporate requirements.

The access to each virtual account be provided on the corporates internal policies.

 

Ease of Implementation: Medium Level

So, corporate out there, please ask your Bank Relationship Manager for ‘Corporate Bill Payment Module’.

 

References:

01) Oracle ® FLEXCUBE Universal Banking Utility Payments User Guide @ https://docs.oracle.com/cd/E86273_01/html/Utility_Payments/UP05-Bill_Payment.htm

02) #EnKashUtilityCard

 

Sri Chaitanya Schools with 500+ Schools onboards BBPS

            In a major boost to BBPS (Bharat Bill Payment System), Shri Chaitanya Schools Group stated onboarding it schools on to the BBPS.

SCS started its journey in 1986 and over the last 25 years has grown into a chain of 507 schools, spread over 8 states.

5,50,000+ students pursue their education at SCS.

This means now these 5,50,000 students can pay their school fees via BBPs, 24*7, 365 days a year.

As more and more parents (11,40,000+) experience the Joy of BBPS, they will be encouraged to pay their Utility Bills and other Bills via BBPS. This will add to the BBPS Volumes.

Other possibilities in the near future:

·         SCS 500+ branches pay their Utility Bills via BBPS only. A corporate ‘Bill Pay Module’, will enable SCS Admin Team to achieve this.

·         SCS 27,000+ staff will pay all their Bills via BBPS only.

·         SCS management will share it’s BBPS experience with their peers and guide them for seamless onboarding to BBPS.

SCS Management has taken the first step in the BBPS journey and now it all depends on AXIS Bank on how they guide SCS Management to make the best use of BBPS.

SCS students can pay their Tuition Fees and Bus Fees right now via BBPS

Let me close with this Quote:

What the outstanding person does, others will try to do. The standards such people create will be followed by the whole world.

—The Bhagavad Gita

Source: http://www.inspiration.rightattitudes.com/authors/the-bhagavad-gita/

 

 

BBPS Average Transaction Value crosses INR 2000/- on 20/07/2020

BBPS Average Transaction Value crosses INR 2000/- on 20/07/2020

 Nothing to add more, the BBPS volumes say it all

 

Which bank will be the first to pay its Utility Bills via BBPS?

I often wonder as to how banks pay their utility bills. The old-fashioned way i.e Demand Drafts or the new-fashioned way i.e BBPS.

On an average every day BBPS sees 5 lac transactions on its platform. With 250+ Billers on BBPS, BBPS is fast becoming India’s favourite channel for bill payments.

Now is the time for Banks too onboard BBPS for payment of their Utility Bills.

BBPS will get a major boost if all the Banks in India decide to pay their Utility Bills especially Electricity Bills via BBPS mode only.

This will be a major enabler for corporates all over India to pay their utility bills via BBPS. This will convince corporates to quickly adopt BBPS Payment Mode for their utility bills too.

Banks need to pay Electricity Bill, Water Bill, Landline Bill, of physical branches and administrative offices. Of course, water charges can be part of the monthly maintenance amount paid above the rent to the landlord.

As per RBI data base, as on 31^st March 2020, there are 1,56,329 Commercial Bank Branches functioning all over India. This number includes administrative offices as well as normal branches

Administrative Offices -    6,352

Branches                  - 1,49,977

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Total                          - 1,56,329

Co-operative Banks are not part of the above numbers. Of course, they too can pay utility bills via BBPS. Nothing stops them.

In simple terms, Commercial Banks pay 1,50, 000/+ Electricity Bills and a lesser number of water bills.

The number of landline bills is more as physical offices may have more than 1 landline.

Commercial Banks can remit the Utility Bills via their own Net Banking portal or tie up with any other bank if required. Regional Rural Banks can tie-up with their sponsor banks.

I look forward to a similar statement in the Banks Annual Reports.

 “We are proud to announce that 85% + utility bills of the Bank are paid through the BBPS mode only.

Further we have onboarded ____ + corporates to the BBPS Payment mode”

After all, 'The proof of the pudding is in the eating'

Q: Will it be difficult for banks to pay all their utility bills via BBPS

Ans: No, it will not be difficult. It requires one-time effort to set up the process, i.e

·         define the process flow,

·         set up internal accounts,

·         provide transaction rights for the identified bank staff

·         Tag the respective biller details

·         lay down audit activities