Starting July 1, 2024, the Reserve Bank of India (RBI) enforced a new regulation for credit card repayments. All third-party credit card payments must now go through the Bharat Connect, managed by the National Payments Corporation of India (NPCI).

This means that credit card holders will no longer be able to use popular third-party apps like CRED, PhonePe, Amazon Pay, and Paytm to settle their bills. This shift is set to bring big changes to the way digital payments are processed in India.

What does this mean for fintech companies, banks, and, more importantly, the millions of users who rely on these services every day? Let’s dive into this transformative move and explore its potential ripple effects.

What’s the Bharat Connect Mandate All About?

At its core, the Bharat Connect (earlier known as BPPS) is designed to streamline bill payments across India. By creating a unified platform for recurring payments like utilities, subscriptions, and more, it ensures that everything from your electricity bill to mobile recharge is managed in one place. With the RBI now pushing for the expansion of Bharat Connect, the system is set to grow beyond its current offerings. This could mean a more standardized, transparent, and secure environment for bill payments, benefiting everyone in the ecosystem.

What Does This Mean for Banks?

For banks, this mandate is a big deal. Traditionally, banks have been intermediaries for transactions but have had limited involvement in the rapidly growing bill payment space. With Bharat Connect becoming a mandatory platform for bill payments, banks find themselves at the center of this revolution.

• New Role as Digital Transaction Hubs: Imagine a world where banks are the go-to place for all digital payments. With Bharat Connect, this could become a reality. Banks will not only continue to offer traditional services but will also become crucial players in the digital bill payment landscape, handling everything from government taxes to broadband payments.

• Better Customer Experience: Banks can now integrate Bharat Connect into their platforms, whether through mobile apps or online banking. This means customers can pay all their bills in a seamless, unified manner, without jumping from one app to another. It's all about providing a smooth, one-stop solution for consumers.

• Fresh Revenue Streams: For banks, there’s an added incentive. With every transaction that goes through the Bharat Connect system, there’s potential to earn revenue through processing fees. It’s a win-win situation where both customer experience and profitability align.

What Does This Mean for Fintechs That Offer White-Labeled Merchant Apps?

While fintechs that provide white-labeled merchant apps to banks have primarily focused on enabling SME onboarding, merchant engagement, and payment facilitation, the Bharat Connect (earlier known as BBPS) mandate signals a shift in how they structure their offerings.

• Collaboration with Banks: Fintechs, which have helped banks enhance their digital capabilities through branded merchant apps, will now need to ensure Bharat Connect integration within their platforms. White-labeled merchant apps must evolve into comprehensive business hubs that offer seamless bill payments alongside existing features like invoicing, transaction tracking, and customer engagement.

• Enhanced App Capabilities: By embedding Bharat Connect-powered bill payments directly into white-labeled merchant apps, fintechs can enable banks to provide a unified financial experience to their SME customers. This means merchants can collect payments from customers while also managing their own business expenses—electricity bills, rent, and other operational costs—all within the same app.

• New Monetization Pathways: With Bharat Connect integration, fintechs can help banks unlock new revenue streams. The processing fees associated with bill payments can be an additional source of income for banks, further strengthening their value proposition to merchants

The Bigger Picture: Opportunities for Growth

At the end of the day, RBI’s Bharat Connect (earlier known as BBPS) mandate is more than just a regulatory update. It’s an opportunity for growth, not just for banks but for fintechs offering white-labeled merchant apps as well. For banks, it means deeper customer engagement and new revenue models. For fintechs, it’s a chance to strengthen their value proposition by offering an end-to-end merchant solution that extends beyond transactions and into business management.

And for SME merchants? They get the best deal of all—a more secure, efficient, and convenient way to manage both their business and personal bill payments from a single banking app.