With new add-ons, NPCI is trying to bring the Bhim app on par with other payment options.
The government last month announced the launch of the second iteration of its BHIM (Bharat Interface for Money) app. While the app was very popular right after demonetisation, its popularity took a hit as other payment apps such as PhonePe, Google Pay, and Unified Payments Interface (UPI) apps from banks flooded the market. The app which commanded 50% of the market in both transactions and volumes in August 2017, had only 4-6% market share in August 2019.
The reasons for the decline in its popularity can be traced to its inability to keep up with its new rivals which sported new features. Ever since the introduction of Bharat QR, the app has not been updated to accommodate new features, leading to customers switching to platforms that provide ease of use and a better user interface with more features, such as chats.
When the government introduced UPI, a plain vanilla interface was in itself an innovation. The BHIM app, built on UPI technology, could be used to carry out simple forms of transaction. You could send money, ask for money, or check your bank balance. And all this could be done in several Indian languages. The novelty of UPI, over Immediate Payment Service (IMPS) which offers an inter-bank electronic fund transfer service through mobiles, was that the platform neither required a separate Mobile Money Identification Number (MMID) number to conduct transactions, nor did it need lengthy bank account numbers and IFSC code. The process was easy, one could create a virtual ID to mask the account number or better yet, transactions could be carried out using mobile phone number, as was the case with wallets.
Not many had thought that the payment innovation would be such a big hit. Data from National Payments Corporation of India (NPCI) show that UPI transactions hit the one-billion-mark in volumes last month. While the number of combined UPI and mobile wallet transactions is more than that of debit and credit card, in terms of value UPI still has a long way to go.
Although wallets did not have that many innovations either and were still plain vanilla systems, depending on cashbacks to lure customers, competition from UPI has ensured innovation on the part of digital wallet players. Not only can one book train tickets, pay challans, electricity bills and buy gold using wallets, they also come equipped with features like automated payments for bills, donations and scheduled payments.
BHIM 2.0: More features
The private companies-backed UPI apps also introduced innovations of their own, but limited scope from NPCI has not allowed the sector to be on par with wallets. The NPCI changed that in August this year when it launched the UPI 2.0 platform, which allowed donations and automated clearing of bills, and the likes of PhonePe front loaded their apps with systems such as bill payments besides government payments.
But now the government is also in the race, with BHIM 2.0. Whereas earlier BHIM accommodated only a reminder system for bills, now you can keep an automated payment. Donations can be made. Language support has been increased. And, now BHIM features all banks on its UPI platform, and allows multiple bank account linking. The amount of money transfer, though, still has a ceiling. While others allow Rs. 1 lakh, BHIM still does not allow that.
Preference for apps such as Google Pay (it allows chat), PhonePe (more payment options) or PayTM (challan and NPS payments) will always be there, but the government is at least making an effort to compete. ‘Tap and Pay’ feature is something that the government can introduce, so also Face ID. More important, government needs to allow linking of credit and debit cards to ensure ease of access.
After all, the job of the government in payments space is not just to compete but innovate and lead the way. As long as digital is growing, the ‘how’ should not matter.