Retail payments through Aadhaar-linked BHIM mobile app see declining trend

Retail payments through the Aadhaar-linked Bharat Interface for Money (BHIM) mobile app are declining more than two years after the government announced it.

According to the data from National Payments Corporation of India (NPCI), retail payments on the NPCI platform using BHIM, based on the Unified Payments Interface (UPI), declined from a peak of 18.27 million transactions, valued at Rs 82.06 billion in October 2018, to nearly 12.83 million transactions, valued at Rs 56.24 billion in February 2019.

Thus, in five months, the decline in terms of the number of transactions was about 30 per cent and the fall in value about 31 per cent. 


Aimed at small merchants, especially in rural areas, merchants through BHIM can initiate transactions where customers can pay using their Aadhaar number and authenticate it by using their biometrics for the goods and services purchased.

According a senior banker, the long time taken in transactions and the lack of use of smart phones, which is mandatory for the transactions to go through, are some of the hindrances in the use of BHIM. 

Also, customers often are hesitant to provide biometric details for payments, said the banker. 

The average time taken by a BHIM PoS device for a transaction to go through is around two minutes against a few seconds for credit- or debit-card payments. 

The government has given targets to banks for digital transactions and BHIM Aadhaar PoS deployment for this financial year. Apart from these two, a few other parameters on the ease of digital transactions are used to assign monthly scores to banks.

Thereafter, they are being ranked “good”, “average” and “unsatisfactory”. 

While most banks have met more than 80 per cent of the target for digital transactions till January, and some even exceeded 100 per cent, most of the banks fared poorly in BHIM Aaadhar PoS deployment. For most public sector banks, the percentage of achievement was less than 20 per cent as of January 2019.

“The BHIM PoS deployment would need active support from the government. For example, in Andhra Pradesh and Telangana, the BHIM Aadhaar PoS device has been distributed in all ration shops, which led to the increase in the number of transactions,” said a senior banker with a public sector bank.


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