BHIM – UPI App, the Digi Dhan for the masses

BHIM (Bharat Interface for Money) is an App based on UPI (United Payment Interface) and is built over the Immediate Payment Service (IMPS) infrastructure. Over the years, research has proven that a Demand-Technology Life Cycle is a useful model for marketing planning and sales forecasting. Different stages in the Product Life Cycle (PLC), including Introduction, Growth, Maturity, Saturation and Decline are used as a basis for marketing programs, level of advertising, nature of distribution, pricing strategy and so forth.

For as long we can remember, the Credit/Debit cards technology has been satisfying the need for making transactions. This technology has been used extensively due to its extensively integrated financial infrastructure throughout the world. Also, in the past 20 years, increasingly people have been making digital payments using this technology. These cards in the present product form seem to have entered the decline phase of their PLC.

With the advent of the smart phone, the most pervasive device of the 21st century, a new Technology Life-Cycle (TLC) got started with the emergence of Mobile Wallets, as they served the need for ‘’Cashless Transactions’’ in a superior way. These wallets have a clear advantage over the cards, in that they could be carried and used on a mobile phone. Almost every e-Commerce App created its own mobile wallet in order to enable digital payments and achieve customer stickiness at the same time. The competition being abundant in the mobile wallets, they are currently in the maturity phase of their Product Form Life-Cycle.

Digital payments offered important market opportunity of reaching to the masses. BHIM UPI App, a radical innovation by the Government of India to empower the citizens post Banknote Demonetisation, captures this market opportunity well. UPI is seen as an efficient replacement of mobile wallets in the future. UPI technology has avoided the initial resistance to widespread acceptance and is currently in the growth phase of its own Technology Life Cycle.

UPI allows the user to instantly transfer money between bank accounts of any two parties. A key advantage of UPI is that the service is available 24/7 throughout the year, including weekends and bank holidays. All this on your smart phone, the most pervasive device of the 21st century. In addition to being a real time inter-bank payment system, multiple bank accounts can be linked to a single App. As the life-cycle progresses through the introductory phase to growth phase, we should see more innovations in UPI along with introduction of new product forms in 2019 and onwards. Late Adopters, including early majority and late majority (Refer Figure 1) will become the new users of the UPI App based Digital Money.

UPI – A Digital Money Technology simplified for the Majority

UPI is like an email ID for your money. It is a unique identifier that your bank uses to transfer money and make payments using the IMPS (Immediate Payments Service). Some of the things I have found really useful while using BHIM is making bill payments (mobile, utilities et al) and purchases on ecommerce websites. Overall, I can make all online payments easily without requiring a digital wallet, a credit / debit / ATM card, or Net banking. Icing on the cake is getting rewarded for using UPI, including cash back per transaction. The security is powerful yet user-friendly. You simply get a request on your App with the amount and details of the requestor, once you accept, then only the payment is processed.

It is well known that India is one of the most printed currency-dependent country in the world. RBI, IBA and NPCI came up with UPI more than two years back as a solution for some of the challenges in the Indian economy, some of which are listed below:

1. Currency in circulation is about 12% of the country’s gross domestic product.
2. Soon the total number of Aadhaar cards will touch a billion.
3. Of the six lakh+ villages in India, only about 1/4th of these have banking services with a large. number of households excluded from banking.
4. Number of non-cash transactions per person stands at approximately 9+ per year.

UPI enables cashless payments in a faster, easier and smoother way for millions of people in India. By making micro payments cashless, it empowers smaller buyers and sellers with a technology of the future. Pretty soon it will be possible to withdraw cash through ATM using any UPI App. As the economy grows, the number of smartphones will grow, which will enable faster adoption among the late adopters.

In 2019, we should look forward to more developments with regards to technology and new types of products and services based on UPI. This is clearly a case of different product forms competing for the Digital Payments market segment while satisfying the demand for Cashless transactions. Companies in the digital payments space need to decide which demand technology to invest in and when to transit to a new demand technology.