Interoperable Bill Payments

Streamlining the process of bill payments across authorities and departments

Why:

Individuals have to pay multiple bills on a monthly basis, including electricity, water, loan EMIs, and mobile recharge. Keeping track of all individual due dates, navigating complex standalone portals, and making payments for each bill is a difficult, time-consuming process. This often leads to an increase in missed payments and defaults, which subsequently results in higher interest rates for individuals and a weaker economy for the country.

Centralisation of payments through a single portal is not an option. It would create a bulky, slow system that becomes the target of cyber attacks. It will also cause various departments to lose agency and autonomy over their own collections and create friction in society.

Leaving payments integration to private sector players is not an option either. Multiple bill issuers would have to integrate with multiple different applications each, once again causing high friction, loss of opportunities, and a monopolistic situation for the first mover.

The only solution lies in establishing interoperable bill payment rails through the Digital Public Infrastructure approach.

What:

Interoperable bill payments enable people to view and pay all their bills through a single platform of their choice.

The bills are federated at the back end, but centralised for user experience.

Through this, the objectives of all parties are met:

1. Bill issuers: They retain control over their own assets, and can decrease the costs of their own issuing infrastructure.

2. Market innovation: It allows a variety of market players to innovate services, platforms, and applications on top of the bill payment rails to cater to diverse segments of society.

3. Bill Payers: Individuals now have the freedom of choice, bolstered by the variety of payment applications available to pay their bills through a single platform

How:

To make an existing billing infrastructure interoperable, all that is needed is to simply open up the APIs (Application Programming Interfaces) of different bill issuing authorities. This enables a variety of user-facing applications to ‘fetch’ the data from the issuers and present it to the individuals through their platform.

Individuals can choose to make the payment directly from that same platform or through other means such as cash, card or cheques.

The bill data is retrieved from the issuing server and not stored within the individual applications.

Once the APIs are open, any market player (once it clears the necessary safety measures set out by the central bank) can use them to fetch data based on individual consent. There is no need to separately on-board different issuers or platforms over and over again.

Financial Model:

A variety of financial models can be established on top of this infrastructure. One common model is that each time an intermediary fetches a bill for an individual, they charge the bill-issuing authority a minimal amount (0.0x%) of the transaction. The percentage is determined by the central bank and remains consistent for all intermediaries to ensure a level playing field.

This money is the cost of convenience for letting the bill be discovered (and hence paid) by the individual on the application of the individual’s choice. This cost is absorbed by the bill issuer rather than passed on to the consumer, thus ensuring that the cost of the bill for the individual across all applications remains standardised.

Benefits:

1. Federated Control: Data continues to be stored on individual servers of issuers and is only fetched and displayed upon receiving an API call.

2. Inclusive Innovation and Interoperability: The design of the infrastructure allows multiple market players to innovate services and platforms on top, while ensuring no additional work for bill issuers to integrate with diverse systems.

3. Privacy and Security by Design: The intermediary applications cannot see, modify, or force transactions. They can simply display the bills based on an individual’s consent, who are free to pay through the same application or any other means of their choice.