Given the plethora of banking apps and wallets, India’s fledgling digital payments landscape is in danger of getting fragmented, especially since many of the platforms aren’t interoperable. Combine this with the fact that a third of Indians don’t have phones and just 250 million have smart-phones, it is obvious digital payments have a long road ahead. Though it is early days, National Payment Corporation of India’s (NPCI’s) Bharat Interface for Money (BHIM) app could well offer a solution to most of these problems—hardly surprising, then, that it has been downloaded by more than 5 million people since it was launched on December 31, making it the most trending app on Google Play Store. The fact that a PayTM allows you to load your wallet using BHIM—through a bit of a circuitous route right now—is testimony to its growing appeal.
Like all apps, there are kinks that need ironing out and features which will get added with each new version. So, by March, BHIM will have BillPay and other such features that wallets have—BHIM, though, is not a wallet and operates directly from your bank account—and will be linked to the address-book in your phone. Its biggest advantage, a feature it has borrowed from NPCI’s Unified Payment Interface (UPI), is that while people can send/receive money from you, your identity can be your phone number or anything—your bank details will never be public. Apart from those with smart phones, UPI is easy to use on feature phones and, best of all, it works for those who have no phones. In this case, a merchant will have a digital scanner—it could cost R2,000-3,000—attached to the earphone jack of her/his smart-phone, and a person with an Aadhaar-linked bank account can simply put her/his thumb-print on the scanner. Once authenticated, within seconds, this will be directed to the bank server where the money will be deducted and credited to the merchant’s bank account without anyone needing to remember any complicated passwords; for the system to be universal, the government will have to ensure all Jan-Dhan accounts are Aadhaar-seeded from the current 55% level. Though the prime minister announced this on December 31, it will take 4-5 weeks for the facility to become operational.
Unlike wallets or mobile PoSs that use ‘static’ Quick Response (QR) codes—essentially, bar codes that identify a merchant/individual—for making payments, BHIM offers ‘dynamic’ QRs where you can input the amount that needs to be paid and that becomes part of the QR generated by your phone, to ensure there are no errors in punching in the amount to be paid. Right now, BHIM’s QRs cannot be read by other systems but once RBI allows interoperability, most bank wallets will have common QRs in the same way that Master, Visa and RuPay have worked to have common QR codes. India’s digital payments landscape just took another big leap.