NPCI-owned BHIM is on the verge of completing three years, and it was amongst the popular app running on UPI railroad. During its initial days, BHIM was gaining wide acceptance in the audience on the back of demonetisation and promotion by the government itself.
In March 2018, BHIM, for the first time, crossed 10 million transaction volume mark and registered 11.95 million transactions worth Rs 4,839.65 crore. The number gradually increased but soon it reached the saturation level, and since October 2018, BHIM couldn’t manage to grow.
We are taking one year (September 2018-August 2019) for depicting the downfall of BHIM. It can be clearly seen that its transaction volume remains stagnant around 16 million. While UPI has recorded its best figure in the last two months, BHIM contribution comes to lowest in the period.
In August, UPI had registered 918.35 million in the volume of transaction of which BHIM only contributed 1.84%. To be sure, it was the lowest contribution in the past 12 months. The previous figure for the lowest contribution was 1.86% in March 2019.
The rapid growth of Google Pay, PhonePe and Paytm had choked the growth of BHIM. With a combination of incentivising strategy (cashback or freebies) and add-on facilities within their app, the trio is leaving little room for others to grow.
In August, these three firms have contributed close to 90% in UPI volume. Flipkart-owned PhonePe recorded the highest number at 342 million, followed by Google Pay at 320 million while Paytm reduced to the third spot at 157 million.
Like BHIM, Mobikwik, Freecharge, Amazon Pay are unable to record significant growth because of aggressive strategies adopted by the top three firms.
To create a safeguard against the downfall of BHIM, NPCI has been evaluating some of the issues like eliminating merchant discount rate for low ticket size transaction and bringing more banks under its ecosystem.
Moreover, NPCI is reportedly mulling over capping UPI market share to 33% for all apps. The move will prevent concentration of volume (number of transactions) by a few entities. In case such regulation comes into effect, it will impact PhonePe and Google Pay, which have been scoring more than 33% each in UPI ecosystem.
Capping of transactions volume to applications running on UPI railroad can cause inconvenience for users who transact frequently via a preferred app. While such decision would provide a new ground for govt-owned BHIM, it will also erode the markeshare of leaders – Google Pay and PhonePe.