The primE Minister last week launched BHIM-Aadhaar to ease the process of transactions further. This was the third such iteration of the app that the government has launched in the last nine months. First, it had introduced Unified Payment Interface in August based on IMPS service, and then built upon UPI a service called BHIM to match the ease of wallet transactions. Demonetisation did not leave people with many choices, but to adopt digital platforms, with cash returning back to the system the government would have to make processes much simpler.
So, now with BHIM-Aadhaar it has combined Aadhaar Pay and BHIM, which would allow merchants to make transactions using biometric authentication. More important, it has also started a system of bonus and referrals to attract as many merchants and consumers.
While for now, BHIM is not attracting any interbank, UIDAI or NPCI charges, but the government would have to let banks charge a fee to keep them in business, otherwise banks would have no incentive to promote BHIM. Instead of lowering the costs too much to hurt bank’s businesses or asking banks to bear the brunt, the government would do well to take some of these charges on its balance sheet.