Making Credit Card Payments On Some Apps Has Now Got Tricky

Payments and facilitating payments are a big business in India, with an entire category of banks – payments banks – designed to boost this segment. A key component of payments is credit cards. According to the latest data from the Reserve Bank of India, 10.25 crore credit cards had been issued as of April 2024. This number is up by 7.4 lakh from March 2024 and a huge 1.6 crore from the first month of 2023-24.
 

Credit Card Volumes

Like the number of credit cards, the flow of transactions associated with them has also grown rapidly. As per the central bank’s data, the number of transactions conducted by credit cards – either online or via Point-of-Sale terminals – had risen to 34.4 crore in April 2024, representing a year-on-year increase of 33 percent. In terms of value, credit card transactions in April 2024 amounted to Rs 1.56 lakh crore, 18 percent higher compared to the same month last year. The total outstanding amount on credit cards as of May 31, 2024, was Rs 2.68 lakh crore, up 26 percent from the same time last year. Clearly, credit cards are growing on the Indian consumer.
 

Paying Credit Card Bills

Given the rapid growth in credit card payments in India and the overall push towards digital payments, it is natural that helping consumers pay their credit card bills online as easily as possible has become a key business opportunity. In fact, entire businesses have emerged in the fintech sector solely to facilitate the payment of credit card bills. These options have emerged and offer rewards even though customers can pay their credit card bills on the website of the issuing bank.
 

What Has Changed?

According to guidelines issued by the Reserve Bank of India in February 2024, it is compulsory for all credit card bill payments to be routed through the National Payments Corporation of India’s Bharat Bill Payment System from July 1, 2024. This applies to third-party applications as well. For these third-party apps to make these payments, not only do they have to be members of Bharat Bill Payment System, but the issuer of the credit card – such as the bank which issued it – has to be active on the system to receive these payments.
 

The Bharat Bill Payment System, operated by the National Payments Corporation of India as authorized by the Reserve Bank of India, is a "one-stop ecosystem for payment of all bills." Routing all credit card bill payments through the Bharat Bill Payment System provides security to customers. When users of credit cards pay their bills through third-party apps such as Amazon Pay or Paytm, it is the app that settles the money to the bank. Routing all such payments through a centralized entity would enhance safety. Additionally, it provides other benefits such as greater oversight on credit card exposures and increased integration convenience to issuers of credit cards.
 

Latest Status Update

As of July 3, 2024, the following banks are live on the Bharat Bill Payment System, meaning that bills of credit cards issued by them can be paid on third-party apps such as CRED: AU Small Finance Bank, Bank of Baroda, Canara Bank, Federal Bank, ICICI Bank, IDBI Bank, IndusInd Bank, Kotak Mahindra Bank, Punjab National Bank, Saraswat Bank, SBI Card, and Union Bank of India. In what is good news for customers of other credit card issuers, some of the biggest names are currently working to get activated on Bharat Bill Payment System. According to the Bharat Bill Payment System website, the status of the following is 'work in progress': Axis Bank, HDFC Bank, IDFC First Bank, Indian Bank, Indian Overseas Bank, and YES Bank.
 

Should You Be Worried?

Media reports have indicated in recent weeks that some third-party apps could face disruption in making credit card bill payments after July 1 if the issuer of the cards is not yet active on Bharat Bill Payment System. However, the banks are making steady progress, becoming 'live', meaning that persons with its credit cards can seamlessly pay their dues from third-party apps.
 

Media reports have also said that industry body Payments Council of India had asked for an additional 90 days for banks to ensure Bharat Bill Payment System compliance so that credit card users do not face any disruptions. While there has been no announcement of such an extension being granted, it is in the interest of the credit card issuers themselves that they become 'live' on Bharat Bill Payment System as quickly as possible. As such, there is no real cause for concern for people using credit cards, for even if their bank that has issued the card takes some time to become integrated with Bharat Bill Payment System, they can always pay their bills through the bank’s website.