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May 4, 2024

BHIM App Joins ONDC to Challenge Google Pay and PhonePe Dominance in UPI Transactions

In a strategic move to bolster its position in the Unified Payment Interface (UPI) transactions, the Bharat Interface for Money (BHIM) app is set to integrate with the government-backed Open Network for Digital Commerce (ONDC). This development aims to pave the way for BHIM to expand its presence in the ecommerce realm, allowing users to access a wide range of products and services through the platform.

According to sources cited by ET, BHIM will establish a dedicated division to venture into the ecommerce space facilitated by ONDC. Users will soon have the convenience of shopping for food and beverages, groceries, fashion, and apparel directly through the BHIM app on the ONDC platform. This move is expected to boost BHIM’s adoption rates in comparison to its competitors, such as Google Pay and PhonePe.

“By enabling BHIM users to shop for various products on ONDC, we anticipate a significant increase in BHIM app adoption, thus challenging the dominance of Google Pay and PhonePe,” an official stated in the report.

In response to this development, Inc42 has reached out to ONDC for comment. Updates on the story will follow upon receiving a response from the concerned authority.

Since its launch in 2016 by the National Payments Corporation of India (NPCI), BHIM has lagged behind its competitors in terms of UPI transactions. While PhonePe processed 650.2 crore UPI transactions in March 2024, Google Pay and Paytm facilitated 506.1 crore and 123 crore transactions, respectively. In contrast, BHIM managed only 3 crore transactions during the same period, as per NPCI data.

The dominance of a few players in the UPI space has garnered attention, prompting concerns about market concentration. In February, a parliamentary panel report highlighted the significant market share held by Google Pay and PhonePe and emphasized the need to promote indigenous players in the fintech sector. In March, NPCI conducted a meeting with digital payment startups and companies to gather insights on fostering the growth of smaller third-party application providers (TPAP).

Meanwhile, the momentum of ONDC remains strong, with the network continuously onboarding prominent companies and startups while expanding its offerings. ONDC is now eyeing the inclusion of news media platforms on its network, with Dainik Jagran reportedly in advanced stages of integration. Additionally, ecommerce giants Flipkart and Amazon are exploring the establishment of ONDC storefronts on their platforms, signaling further diversification and expansion within the digital commerce landscape.

Jhumpa Lahiri

Jhumpa Lahiri

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