Mumbai: After establishing a strong presence in the retail payments ecosystem, NPCI Bharat Connect is now developing an interlinked payments platform for small businesses.
Formerly NPCI Bharat BillPay Ltd, the business-to-business platform is developing a digital infrastructure for India’s 63 million micro, small and medium enterprises, which account for 30-35% of India’s GDP and employ about 110 million people, according to CEO Noopur Chaturvedi.
“The attempt is to make all the systems talk to each other, remove the inefficiencies to make reconciliation much easier, and create a digital trail which can then lend itself for formalization of credit. That is definitely part of the process,” Chaturvedi told Mint.
“While larger corporates have the advantage of very sophisticated systems and bespoke integrations and solutions from top banks, as you go down the value chain, the solutions are more umbrella and don’t necessarily cater to the needs of businesses of different sizes,” she said.
Bharat Connect enables interoperability across different systems, allowing small businesses to streamline operations and reduce time spent on payment tracking and dispute resolutions.
Established in 2017, NBBL’s Bharat Bill Payments System (BBPS) was initially envisaged as a bill payment solution but has now extended operations to over 25 categories of payments.
The platform currently processes more than 200 million transactions per month and aims for 1 billion monthly transactions in two to three years, Mint reported earlier. Currently, 22,056 billers are live on the platform, and transaction values crossed ₹1 trillion in October.
The separate vertical for B2B payments, targeted at MSMEs, was launched at the Global Fintech Fest in September 2024. In the initial stages, transaction volumes are expected to be low for some time.
Currently, the product is in the final phase of development and has been launched in a closed user group to test the stability of the system.
The pilot has so far been well received by bankers as the product gives them visibility of who’s at play down the chain, what systems are being used and which banks they work with—all of which can now interact with each other through the platform.
It is seeing a lot of retailer-to-distributor payments and is trying to focus on facilitating end-to-end processing, Chaturvedi said, adding that she is hopeful transaction volumes will pick up by the end of the financial year.
Bharat Connect has no direct competition as such at present. The platform does not facilitate payments but provides an infrastructure for these transactions (across different platforms and banking systems and B2B players) to happen in standardised manner by being routed through them.
Also Read: Reform the UPI system: We need sustainable digital payments infrastructure
Modus operandi
“Let’s assume the distributors use Zoho or Tally to pay their wholesaler, who in turn needs to pay the manufacturer who might be on SAP or Oracle. The issue is that all these systems don’t talk to each other,” Chaturvedi said.
“What we are creating is a standardized or common language through which these different enterprise resource planning (ERPs) can interact with each other. We’re the first country to have even created a platform that allows for different ERPs to talk to each other,” she added.
View Full Image
Chaturvedi said the company first considered venturing into B2B payments when it approached the Reserve Bank of India for an approval for retail payments.
“That’s where the entire thought process got seeded in so as to ask if we can do something to solve the B2B collection problem, which exists across countries,” Chaturvedi said, adding that the idea was to offer “an upstream solution” given that customer to retailer (B2C or retail) problem has already been solved through NPCI’s UPI (Unified Payments Interface), RuPay and other such options.
We’re the first country to have even created a platform that allows for different ERPs to talk to each other.
Building data
Routing a significant number of retail and MSME transactions through the platform means creation of an organic database. But, the NPCI subsidiary has no plans to play the role of a data aggregator so far, Chaturvedi said.
“We’re not building it (data) and we don’t intend to build it either. Now, tomorrow it is quite possible that RBI may come to us and say that have your data also made available on account aggregator platforms and then we will do that. RBI may also come and say let the Bharat Connect data and the B2B data be available for ULI (Unified Lending Interface), so we could do that as and when,” she said, adding that the platform will also “explore synergies with ULI over the course of time.
Also Read: NPCI may have set off a revolution in pre-approved UPI loans
The platform operates as a ‘switch’ or intermediary for transaction settlement for which it receives a switching fee against every transaction processed. While for retail payments, this is usually a flat figure, the fee structure for B2B payments is still being developed in consultation with the entities that have already joined the platform, Chaturvedi said.
But revenue is not on her mind right now. “B2B is one area which is waiting to be disrupted and has been waiting for an interoperable solution that hasn’t existed. Solving that problem will lead to the next 100 unicorns in the coming three to four years. So, irrespective of the revenue share, a lot of our focus for at least the next two-three years will go into this new plan.”
“Revenue will follow, but creating value and innovating is more important; revenue is an outcome, not the input,” she said.
