look news india
Fintech startups such as Cred, PhonePe, BillDesk and Infibeam Avenues are facing significant disruption due to the regulation requiring the issuance of credit card bill payments through a centralised billing network.
The rule will come into effect from July 1. India's largest card issuer HDFC Bank with 20 million credit cards, ICICI Bank with 17 million cards and Axis Bank with 14 million cards have not yet activated the Bharat Bill Payment System (BBPS). As a result, payment platforms such as PhonePe and Cred, which are BBPS members, will not be able to process card payments for them and for non-compliant lenders. Fintechs fear that they will face a massive drop in transaction volumes due to this situation.
The Reserve Bank of India (RBI) has directed that all credit card payments after June 30 should be made through BBPS. The payment industry has applied to the regulator to extend the deadline by 20 days, but there has been no hearing on the matter at the moment. Out of the 34 banks authorized to issue credit cards, only eight banks have activated BBPS so far.
Even five of the top 10 banks are not equipped for the new system
Credit cards of eight banks have been activated for payments through the centralised network mandated by RBI.
Only five of them are among the top ten banks based on volume of cards issued.