Our cell phones have pre-installed social media apps, but why don’t they have digital payment apps which could be more productive and beneficial to smart-phone users?

Perhaps, the Government thought about this and as a result, recently asked mobile manufacturing companies to include the Bharat Interface for Money (BHIM) app offered by National Payments Corporation of India (NPCI) in the list offered as in-built apps with new phones.

Recently, the Telecom Regulatory Authority of India (TRAI) chairman, Mr R.S. Sharma, evoked the need to make digital payments cheaper—a must to promote digital payments, he thinks. Commenting about this he said, "If we want to have a sustainable digital transactions system, we must ensure MDR (Merchant Discount Rate) is zero, especially for small-value transactions because that is where the tipping point will come."

He further added, "We are a frugal country in the sense that we don't want to pay anything for digital services, especially when there is an alternative not to pay."

Post demonetisation, the Government considered possibilities of lowering the MDR, but all their efforts were met with some resistance. On the one hand, CEO of the Niti Aayog, Mr Amitabh Kant communicated that “We are pushing digital transactions. Our aim is to bring down MDR charges. Also if volume of transactions increase, MDR charges will come down.” While on the other hand, the response of credit and debit card makers, makers of digital gateways, and card readers wasn’t encouraging and supportive.

The reaction of Mr Lokvir Kapoor—CEO of Pine Labs, a maker of card readers—was: “With low MDR, banks will not have incentive to acquire merchants and deploy POS machines. While we will not be directly impacted by low MDR since we do not feature in the settlement process, we will be affected if banks do not want POS machines.”

On this backdrop, the Government’s insistence on offering BHIM as a pre-installed mobile app looks crucial. If it’s successfully implemented, it may encourage the mobile payments —a key in giving digital payments a push.

Why BHIM can make a big difference?

• It functions without an internet connection
• Unlike an e-wallet company, the BHIM app doesn’t store your money. It facilitates the transaction of money from one account to another. You can send money even to Non-UPI banks
• You can create QR (Quick-Response) codes to perform transactions without revealing your phone number. Once the sender scans the QR code, you will receive the payment
• BHIM app has a three-layer security authentication system against the two-factor system standard net banking apps, or chip-pin debit/credit cards have
• It uses an encryption level matched with the likes of Google Pay and Apple Pay
• There’s a daily transaction limit of Rs 20,000 and per transaction limit of Rs 10,000.
   

These features make BHIM a perfect app for routine low-value transactions.

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