BHIM planning to dive into e-commerce sector via ONDC
The Bharat Interface for Money (BHIM), a government-supported payment application, is set to venture into the e-commerce sector. According to The Economic Times, this move is aimed at challenging the dominance of Google Pay and PhonePe in India's digital payment market. BHIM, developed by the National Payments Corporation of India (NPCI), plans to use the Open Network for Digital Commerce (ONDC) platform, to broaden its e-commerce reach.
Strategy to boost user base and market presence
BHIM plans to launch this initiative through a separate division, aiming to increase user base. The strategy includes offering many products and services such as food and beverages, fashion items, groceries, and apparel. This move comes at a time when BHIM downloads are increasing due to regulatory restrictions on Paytm, another key player in the sector. To strengthen BHIM's market position, NPCI has appointed Rahul Handa, former executive vice president for strategic initiatives at ONDC, as BHIM's chief business officer.
NPCI's efforts to improve BHIM's user experience
Since its inception in 2016, BHIM has struggled to gain traction because of limited marketing resources and low consumer awareness. To address this, NPCI is set to launch the BHIM 2.0 project, aimed at enhancing user experience and promoting adoption through strategic alliances like ONDC. However, industry experts warn that relying solely on ONDC may not be sufficient to change established consumer habits and preferences.
NPCI's diversification strategy to dilute transaction concentration
In an attempt to reduce the risks associated with over-dependence on dominant players like Google Pay and PhonePe, NPCI is encouraging investment in new third-party payment apps on the Unified Payments Interface (UPI). This diversification strategy aims to decrease the high transaction concentration on these platforms. As reported by Business Standard, about 25% or 5-7 million of Paytm's merchant base has started migrating to rival platforms, including BHIM, presenting a significant opportunity for BHIM to expand its reach.
