Chaitanya GudipatyMoneycontrol
E-wallet companies like Paytm, Freecharge and MobiKwik, among others, were over the moon when demonetisation was announced in November. But they won’t be as enthused at the government’s decision to roll out the Bharat Interface for Money, or BHIM app, to push digital cash transfers in a big way.
If marketed properly, BHIM — an upgraded version of the United Payment Interface (UPI) launched last year — has the potential to render mobile wallet players redundant.
Shot in the arm
Even though UPI was functional long before the government announced currency overhaul exercise on November 8, it failed to find many takers as the government held back on marketing spends and educating citizens about the benefits of UPI. On the other hand, e-wallet players spared no expense in going to town with front page newspaper advertisements, outdoor hoardings and television commercials.
The government's push now gives BHIM app the legitimacy required to instill confidence among users, especially merchants and traders. So far, traders and merchants largely kept away from UPI due to complicated user interface. That the government and the National Payments Corporation of India (NPCI) didn't make a strong pitch to make it a mass product didn't help either.
The BHIM app — which comes close to the government’s vision for UPI i.e. “one app to rule them all” — scores over e-wallets in many use-case scenarios.
For starters, the BHIM app allows offers direct funds transfer across different bank accounts. Mobile wallets, on the other hand, lack interoperability and allow funds transfers only within same wallet operator. No longer would you require to load or top-up mobile wallets to pay for services. Almost all banks including private sector biggies ICICI Bank and HDFC Bank, and state-run State Bank of India have been on-boarded on to the app interface.
Next, the app scores heavily over mobile wallets with regard to transaction limits. Users can transfer up to Rs 10,000 per transaction and Rs 20,000 per day with the BHIM app. Mobile wallet transfers are subjected to a limit of Rs 20,000 per month, which can go up to Rs 1 lakh per month on completion of a Know Your Client (KYC) check. In comparison, the BHIM app allows for Rs 6 lakh worth funds transfer a month.
Also, BHIM app transactions are free of service charges for now (though banks may choose to levy some in future). Mobile wallet transactions, on the other hand, incur service charges.
The Achilles Heel
A few hours after the launch of BHIM app, there were glitches indicating a better-than-expected response. The glitch highlights that the app infrastructure is still ill-equipped to handle high user load. The quicker the shortcomings are fixed, the better are the chances of successful adoption. More importantly, the government has to bear in mind that users want a reliable app when dealing with something as critical as cash transfer.
For now, the BHIM app tops the charts on Google Play store registering maximum downloads for any free Android app in the country.
There are makings of a truly dependable and secure app for immediate funds transfers and instantaneous cashless payments. The government should, therefore, look to capitalise on the momentum and take back the battle to the e-wallet players.
With Friday's launch, the government seems to have stepped up its efforts to make UPI-based BHIM app the go-to interface for cashless payments. The next step should be onboarding as many merchants and traders as possible. The key to this lies in educating them and informing them about the benefits it offers.
