Digitization of the giant Indian economy is on a fast-track. The common man is the biggest beneficiary of this digitization drive of the government. Nowadays, everything from fish and fruits to expensive cars and apartments can be bought or sold through digital transactions.
India ranks as the world’s sixth largest economy with a annual Gross Domestic Product (GDP) of US$ 2.25 trillion (in 2016) and the third for Purchasing Power Parity (PPP) at US $ 8.72 trillion (in 2016). Indicators reveal, the Indian economy will grow at an average 7.3 percent annually.
Moving such a huge economy to a digital platform is quite tardy. The Indian government has chipped in this shift with the BHIM Aadhar and BHIM app.
Digital payment v/s traditional cash
India is a huge country- both in population and area. Despite advances in science and technology, villages in India continue to remain underserved by banks. Only 250,000 Automated Transaction Modules (ATMs) serve the country’s 1.25 billion people. All ATMs have to be stocked with cash daily.
People in remote areas have to travel several miles before accessing an ATM to withdraw cash for buying their daily requirements.
Storing and carrying even modest amounts of cash is risky: The person can be waylaid or robbed. Cash is the topmost target of thieves and burglars.
Often while buying, people find the money they are carrying is insufficient for the purchase.
These problems can be simply overcome by switching to cashless economy.
BHIM Aadhar: The global pioneer in cashless transactions
BHIM Aadhar was launched on April 14, 2017 by India’s Prime Minister Narendra Modi. BHIM is the abbreviated form of Bharat Interface for Money. The brand pays rich tributes to Bharat Ratna Dr. Bhimrao Ramji Ambedkar, the father of India’s Constitution, economist and social reformer and hence was launched on his 126th birth anniversary.
BHIM Aadhar was developed by the National Payment Corporation of India (NPCI) in collaboration with Reserve Bank of India, Indian Banks Association with support from the Union Ministry of Finance.
BHIM Aadhar and its predecessor, BHIM app, is the first payment app in the world to be launched by a government. People can pay for anything with BHIM. All other digital payment apps, regardless of their popularity, are owned and operated by private companies.
BHIM Aadhar has no precedent in the world. It is unique since it uses a person’s biometrics linked to their bank accounts for making payments.
Everyone can use BHIM Aadhaar
BHIM Aadhar endeavors to make cashless payments fun and easier for people who do not own or carry an ATM card but have a bank account linked to their Aadhar card.
Some 1.21 billion people of the total 1.35 billion Indians have Aadhaar cards, according to its issuer, Unique Identity Development Authority of India (UIDAI). Around 99 percent Indian households have at least one bank account, thanks to the Pradhan Mantri Jan Dhan Yojayana financial literacy program launched on August 24, 2014.
Under PMJDY, Indians were eligible to open bank accounts using only Aadhar cards. Invariably, these accounts are now linked to Aadhar- a prerequisite for using BHIM Aadhar. This means, account holders whose bank accounts are linked to their UIDAI (Aadhar) numbers to not have to complete any further formalities to avail of cash transactions through BHIM Aadhar.
BHIM Aadhar is fun because the Indian government will be offering various benefits such as discounts for shoppers and rewards for people referring others to utilize this facility.
Getting started: Tips for stores and merchants
BHIM Aadhar payment facility is available to everyone, regardless of the size of their business. Vegetable vendors to chic boutiques, courier companies and car showrooms- BHIM Aadhar is for everyone.
Basic requirements for BHIM Aadhar
- Good Android/ iOS powered smart-phone.
- BHIM Aadhar app to access the customer’s Aadhar details downloadable from Google Play and iOS Store.
- A plug-in biometric/ fingerprint reader available for about Rs 3,000 each.
- Mobile Internet connection from a reliable service provider.
- A bank account linked to Aadhar to accept payments made by customers.
Money at your fingertips: virtually
BHIM Aadhar works on biometric recognition. The UIDAI (Aadhar) number of the customer has to be fed into the app on a smart-phone.
The details of the customer’s Aadhar card such as name and address will be displayed on the screen.
The vendor keys in the payable amount on the app.
The app gives the customer a choice of his or her Aadhar linked bank accounts from which to pay.
The fingerprint of the customer verifies the Aadhar card and confirms the payment.
If subscribed to SMS alerts with the bank, the customer will receive a text message on their mobile phone confirming the debit.
Advantages of BHIM Aadhar over debit cards/ payment apps
Vendors do not need approach banks for a Point of Sale (POS) machine to process payments made on debit cards.
BHIM Aadhar offers instant cash credit– from the customer’s bank account to that of the vendor. If subscribed, the bank sends an SMS alert to the vendor’s phone confirming the credit.
The Aadhar fingerprint reader and smart phone can be used off-site, meaning, sellers can take them to homes and offices of customers while making home deliveries.
Electrical power outage renders POS machines useless. BHIM Aadhar works on battery powered smart-phones and is unaffected by power outage
Unlike conventional and common payment apps, BHIM Aadhar does not need any complex phone numbers to be keyed in or QR codes to be read. There is no secret Personal Identification Numbers (PIN) to be remembered or entered as with debit/ credit cards.
In cases where an Aadhar card is lost, stolen or misplaced, nobody can use it to make purchases: BHIM Aadhar accepts biometrics (fingerprint or retina scan) of the Aadhar card holder only to confirm the payment. And unlike debit/ credit cards, nobody can clone an Aadhar card for fraudulent use because fingerprints and biometrics are unique to every human.
Customers do not need to download the BHIM Aadhar app.
Flipsides of BHIM Aadhar
There are several flipsides to BHIM Aadhar too. These include:
1. Very few shops have biometric readers to offer payments through BHIM Aadhar.
2. Prohibitive cost of high quality smart phones can deter vendors from offering the BHIM Aadhar service.
3. Inconsistent mobile Internet services in rural and semi-urban areas of India can retard widespread use of BHIM Aadhar, since it is a web-based service.
4. Proxy buying is not possible. Only the Aadhar-linked account holder can make transactions unlike debit/ credit cards and cash.
5. Foreign tourists cannot use BHIM Aadhar for obvious reasons.
Some of the shortcomings of BHIM Aadhar are covered up effectively by its predecessor, BHIM app.
What is BHIM app?
BHIM is yet another mobile app that allows people to make payments for goods and services. It was launched by the National Payment Corporation of India (NCPI) in the aftermath of the November 9, 2016 flash demonetization of Rs.500 and Rs.1,000 currency notes by the Indian government.
It is NOT a mobile wallet. Meaning, you cannot pay money into a BHIM app to pay for products and services such as recharging your mobile account, ordering food and buying tickets etc.
The reluctance by some sections of consumers to use mobile wallets or m-wallets offered by private companies seems to have forced the Indian government to offer BHIM, a state-run service. BHIM works on the Unified Payment Interface. The UPI feature allows you access to your multiple bank accounts.
Getting started with BHIM
Once downloaded, the BHIM app will guide you through every process of set up.
Remember to key in your mobile number that is linked to a bank account only. BHIM app uses the mobile number to access your bank accounts. It does not require you to subscribe to net banking facilities offered by banks.
What BHIM app offers
BHIM app allows you to check balances in your various bank accounts provided they are connected to the mobile number provided, without having a net banking service.
You can transfer funds between your various accounts using BHIM app.
You can send and receive money round-the-clock, 365 days of a year with BHIM app.
BHIM app has advanced security features and all transactions culminate only after you have keyed in the correct access codes.
All Public Sector Undertaking (PSU) banks are connected to the BHIM app. A few private and cooperative banks on the UPI also feature on BHIM app.
BHIM app includes the ‘scan and pay’ feature allowing you to scan a QR code while making payment.
It offers a maximum transaction limit of Rs.20,000 per day. A limit of Rs.10,000 is enforced on each transaction.
Banks can be accessed without net banking
Banks supported by BHIM app include:
BHIM app has its flipsides too
A brainchild of the Indian government, UPI and other agencies, BHIM has several shortcomings. To begin with, the BHIM app is much slower for transactions as compared to others offered by banks and private companies.
Using BHIM app for a transaction can be rather vexing: It crashes often and the number of security questions is sufficient to deter even an ardent shopper.
BHIM has yet to become popular with merchants and hence, its acceptance at this moment is severely restricted.
Unlike payment apps and m-wallets offered by banks and companies, BHIM does not feature any discounts, coupons and other freebies for shoppers.
There is no helpdesk to get you out of a potential monetary loss if you bungle up a transaction on BHIM.
BHIM users can expect more in future
The Indian government, UPI, RBI and various concerned entities are working to make BHIM the foremost mobile payment app in India. BHIM app users can therefore expect several new features and freebies in the near future.
BHIM Aadhar and BHIM app are billed to become the only method of remitting cash while paying for any services availed from the Union and state governments.