BHIM dilemma: Transaction value high, but volumes way lower than rivals

From accounting for a quarter of all UPI transactions, app now has a share of just 0.76%

Though the Unified Payments Interface (UPI) has been a success for the government, its own app has failed to sustain interest.

The Bharat Interface for Money or BHIM, which accounted for a quarter of transactions carried out using UPI within a year of launch, has a minuscule share of 0.76 per cent of the Rs 86.9 trillion worth of UPI transactions now. It lags far behind rivals Google Pay and PhonePe, which account for 86 per cent of the market.

On Wednesday, the Union Cabinet approved a financial incentive of Rs 2,600 crore to provide an impetus to low-value BHIM-UPI transactions and promote transactions via RuPay cards, a card network started by National Payments Corporation of India to rival Visa and Mastercard.

Though BHIM’s popularity grew, its growth was dwarfed by that of other platforms. BHIM recorded a 46 per cent rise in transactions in the past three years, but industry volumes jumped 267.19 per cent over that period. PhonePe and Google Pay recorded a 170.65 per cent increase.

The broad-basing of PhonePe and Google Pay contributed to a decline in average transaction value on these apps. Meanwhile, BHIM has become a high-value player. The average transaction value on BHIM rose to Rs 3314.13 in the first nine months of financial year 2022-23 (FY23) from Rs 3194.12 in the whole of FY22. This was twice as high as the average value of the UPI universe, which was Rs 1670.55 in the first nine months of FY23.

Meanwhile, RuPay’s performance presented a contradictory picture. Although it accounted for 65 per cent of debit cards issued, its share in all debit and credit card transactions (PoS and e-commerce) remained 20.72 per cent. It appeared, however, to be catching up with the industry. Though the average transaction size was just Rs 1,867.29 in FY23, it was higher than in 2022, when it was Rs 1,617.22, which was 51.78 per cent lower than the average of Rs 3,124.34 for the rest of the industry.