BHIM (Bharat Interface for Money) is a digital payments solution app based on Unified Payments Interface (UPI) from the National Payments Corporation of India (NPCI). BHIM is just like a cover what is inside is the UPI’s fabulous payment mechanism. What makes BHIM important? There are different digital wallets like Paytm, which are basically prepaid wallets that require to transfer money from your bank account to the prepaid wallet. But in the case of BHIM (UPI), there is no such money transfer, no recharge as the money is stored with the bank. This type of arrangement became possible as both UPI and BHIM are sponsored by NPCI which is an offspring of RBI. The trust factor is big and the banks are ready to join UPI because of the ‘government factor’. The authorization of the transaction under BHIM will be done by the banks themselves (mechanically) as money used under BHIM are with the bank accounts. The authentication (executing the payment) should be done by the customer through his mobile phone. In this context, BHIM can disrupt the existing private sector mobile/digital wallets. Future of BHIM is to be seen curiously because though small, there are several minuscule transaction costs related with digital payments. For example, if BHIM is to be used for buying goods, merchants should make arrangements with their banks. Banks here will charge the merchants and the latter may put it on customers. Hence some sort of a fees will be charged on BHIM transactions as well. Such issues will come only after the ‘promotional period’ of BHIM is over. Background The NPCI is rocking with digital payment innovations. Its UPI is a payment interface that allows payments digitally by using virtual addresses. The real id and bank account number are not exposed under UPI and that makes it superior to the swiping based PoS. Under UPI, banks have their own UPIs and individuals should use separate virtual ids with respect to each account. Now the government has launched an app called BHIM to enable the user to use only one UPI app in the form of BHIM - a prototype of a payment wallet app for making all UPI based payment functions. BHIM is unified UPI app based on a single UPI enabled bank. In the case of UPI, app of each bank was necessary to execute the transaction. But in the case of BHIM, only one bank account is to be attached to facilitate transaction to any bank. What is the difference between prepaid wallet like Paytm and BHIM? In the case of a prepaid digital wallet like paytm, the money should be transferred to the paytm wallet. The main feature of BHIM is that as a digital wallet, it is based on the bank account. It is not a prepaid wallet like paytm where money is stored. Rather, the money here is stored with the bank. What is the main peculiarity of BHIM? How it differs from Digital wallets? BHIM is an app connecting the user to the UPI’s payment platform. It is not a digital wallet like the Paytm. Here, BHIM will use the bank account of the user which is attached with the UPI. BHIM is based upon the UPI platform developed by NPCI and it is designed as a supportive app for UPI. BHIM app can be used to send and receive money to other non-UPI accounts or addresses. Money can be send via IFSC and MMID code to people who don’t have a UPI-based bank account. QR based digital payments can be made through BHIM: Here, the user should create his own QR code for a fixed amount of money, and then the merchant can scan it for deduction. *********
