#BHIM – Bharat Interface for Money & State friendly Payments Player

For people following / already using Unified Payments Interface (UPI), BHIM app is yet another (and 34th UPI app). If you have not read what UPI is / how they are different from wallet, come back after reading wallets vs UPI for better context.

BHIM – A minimalistic UPI App

The app is built minimalistically in design, size, features, transact-ability threshold (INR 10k per transaction, 20k per day). BHIM is a designed to be minimalistic and supports only most basic features of UPI, while leaving the premium features to be built by banks / PSPs. True to the goal of being inclusive, BHIM would soon be supported over at least 12 languages in days to come.

UPI now has a “Friend of State” player :- 

It was claimed that UPI is a highway, which was responded with perspective that UPI is a toll road, both from cost of payments, developer participation (who gets to build). UPI was restricted to banks in first phase, which meant that only banks / technolgy companies who partnered with banks were allowed to build. The launch of BHIM app by NPCI can be seen as a “friend of state” (NPCI) building a basic minimal road, parallel to the highway. In terms of cost (money), it is still unclear about Merchant Discount rate and the limits on BHIM app (significantly lower) and cost(rights), is also unclear as we don’t have a privacy law and NPCI could still share data (although less likely than say a private UPI player).

NPCI is still a “friend of state” and not state player or even a state backed PSU player, because, NPCI is a private (non-profit) company, largely owned by PSU banks together and is outside the ambit of RTI, after a vague order. For a perfectly consumer / citizen friendly / fair tech, I call for ensuring level playing field in India Stack (of which UPI is part of) for free and opensource solutions, in addition to making a call for development of stack layers itself to follow FOSS model.

Banking & Payments :: Post & Telegraph, Watal Report :-

A lot of us, millennials in India would have known the existence of P&T or Post & Telegraph, prior to separation that carved out a separate Department of Telecommunications (DoT) owned Departments of Telecom Services (DTS) and Telecom Operations (DTO) , which was subsequently divested and renamed to what we today call as BSNL as a public sector undertaking. Recently, Watal Committee on digital payments gave a report with Medium term recommendations to strengthen digital payments ecosystem. (Highlights / Recommendations – Tweet thread). The top most recommendation is

R1 – Make regulation of payments independent from the function of central banking

Separating out payments as a sub-domain delinked from banking domain (more specifically central bank, RBI) can be, in some ways, compared to move of separating out a new tech telecom domain from old postal department even though both come under finance / communication sector respectively. The 2 branches still shall continue to interact, only the org structures, regulations would vary. This can lead to more fine focus on payments sector, lead to regulations, laws, systems which would enable payments to be a separate function of banking. Cost of payments, consumer protection, payments regulator, inter-operable payments, privatizing operations of NEFT, RTGS & make them 24×7, ownership of NPCI are some of the areas of recommendations of Watal Report. CashlessConsumer shall soon discuss consumer protection, cost of payments in-depth and provide feedback to Watal Report. Feedback to Watal Report can be sent to currency-dea@gov.in before Jan 11 (15 days from publishing).

BHIM app, ownership of UPI, ownership of NPCI, segregation of roles of state friendly player, regulator , platform player, platform provider are important policy / techno-policy decisions that need to be carefully taken to avoid digital colonization, anti-competitive market situations either causing monopolization (state or otherwise) , optimal level of regulation that is friendly to both industry and consumer. In this context it is extremely important to understand Watal report send your feedback, even on things like ownership of NPCI, which may not directly visible to us right now, but the cost implications (both money, rights) are huge for days to come.

Disclaimer / Disclosure : I have also reported bugs on UPI platform and have an active interest on the platform from perspective of a consumer of both UPI as platform and UPI APIs.

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