The government will launch an updated version of its mobile payment app BHIM on October 21, packing it with four new features, including enabling participation by users in initial public offerings (IPOs), as it looks to accelerate its usage sharply.
BHIM 2.0, the flagship United Payments Interface (UPI) app of the government, will also feature an auto bill mandate, multilingual support, and ability to link multiple bank accounts, said people familiar with the matter.
Prime Minister Narendra Modi launched Bharat Interface for Money, or BHIM, on December 30 2016, about two months after demonetising Rs 1,000 and Rs 500 notes, under the Digital India Mission to push the UPI payments system and accelerate cash-less transactions in India.
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The app was an immediate success, downloaded 10 million times in 10 days. But BHIM has not sustained that momentum, swiftly losing market share to more nimble private players such as Paytm
and PhonePe. The government believes it can win back customers by offering additional features.
Even the growth of transactions has slowed.
Though 19 additional banks integrated with BHIM between June 2018 and June 2019, the volume of transactions as well as the amount transacted per bank through the app declined during this period. The volume of BHIM transactions per bank reduced by 38,000 and the total amount of money transacted per bank through BHIM dropped by 18 percent to Rs 55.88 crore from Rs 68.06 crore.
Why are customers flocking to BHIM’s competitors?
Customers could be moving to other mobile payment apps for three reasons. One, BHIM can be linked only to the person’s bank account and doesn’t allow integration with credit/debit cards. Two, its use is limited to sending and receiving money. Three, its daily transaction limit is lower than that of other digital, instant payment services.
BHIM 2.0 will address the first two customer pain points. Will these be enough?
Many new customers are choosing other apps because BHIM has failed to build its brand like its competitors. That’s not all.
Other payment applications are attractive to customers because they offer merchant-linked discounts on their platforms regularly. BHIM neither allows such flexibility not offers discounts.
Aseem Juneja, 35, a resident of New Delhi, said, “I am using PayTm since it was launched. I don’t use BHIM. I downloaded it once and deleted it because PayTm offers more benefits and features.”
In a fiercely competitive, but still embryonic market, even the smallest incentives offered by BHIM’s competitors are enough to influence user preferences.
BHIM is also losing out to Immediate Payment Service (IMPS), another instant payment service offered by the National Payments Corporation of India (NPCI). While BHIM’s daily money transfer limit is Rs 40,000, IMPS’s daily transfer limit is Rs 2 lakh.
Between June 2018 and July 2019, the number of IMPS transactions increased by 28 percent. Volume of money transacted shot up by 37 percent. For the same period, the number of transactions and the overall volume of money transacted remained stagnant for BHIM.
In other words, BHIM is struggling to grow.
“IMPS is also run by the NPCI and can't be seen as competing with BHIM,” said a senior official in the Ministry of Information and Technology.
What is the future of BHIM?
BHIM has not captured the market that is traditionally held by the banks nor has it eroded the market share of the newer payment platforms.
The government is sanguine about BHIM’s prospects, however.
“Our analysis is that BHIM’s market share is comparatively low but value and volumes have been steadily rising,” said the official quoted above, asking not to be named.
Sure, BHIM has some advantages over other payment apps. First, BHIM is easy and safe to use —users can download the BHIM app on their phones, link it to their mobile number, and instantly send and receive money from their bank account. Second, the payer doesn’t need the recipient’s account number to make the payment. Third, the payer doesn’t need to load any money in the BHIM app; they can directly transfer the funds from his/her account. BHIM’s fourth and biggest advantage is that it can be used without a smartphone and without an internet connection.
Problem is these features have not been adequately advertised.
The app receives the maximum number of downloads on days when it is mentioned by Prime Minister Modi
in his speeches. But the app is in dire need for a structured marketing strategy that highlights its vital advantages over competitors to ensure better brand recall.
“Google and Whatsapp say that they want to transfer money from x to y,” said the ministry official. “I don’t know what is it that they have in mind. They are not here for charity. But BHIM has no other business apart from helping you transfer money.”
The problem from within
This too is something that the government can highlight in its public relations campaign.
BHIM also doesn’t have a distinct brand name. Every Public Sector Undertaking (PSU) bank has launched its own individual UPI app. All such apps are also named BHIM suffixed by the bank’s name.
For instance, State Bank of India’s (SBI) UPI app is called BHIM SBI. Consequently, users get confused and don’t know which app to download. Sohan Lal, 23, said, “I wanted to download the BHIM app but got confused when I went to the app store. Eventually, I didn’t download any BHIM app.”
Although BHIM is lagging behind its competitors, its underlying payment system UPI has been adopted by banks, private payment companies, merchants, and users. This has resulted in the integration of UPI with private payment services and banks’ mobile apps, which has increased the UPI transactions.
BHIM has lost some market share, but it has successfully created an ecosystem that promotes the uptake of digital payments in the country. With the launch of the rebranded app, the government has an opportunity to take the country’s digital payment market to the next level.
Malvika Jain is a Masters Degree Candidate (Journalism) at Harvard University.