New Delhi: Digital payments firm Paytm has integrated BHIM UPI, the government’s mobile payments interface, onto its platform as it looks to double its monthly user base over the next two years. Paytm, run by One97 Communications Ltd, currently gets about 100 million monthly users on its platform. Introducing payments via BHIM UPI will help Paytm broaden its customer base and help expand the useability of the instrument.

“We are now targeting 200 million monthly users in less than two years. UPI will also allow larger ticket size transactions," said Vijay Shekhar Sharma, founder One97 Communications.

BHIM or Bharat Interface for Money is an application developed by the National Payments Corp. of India (NPCI) for digital payments over the government-managed Universal Payments Interface (UPI) network.

Paytm users will now be allowed to send and receive money over BHIM UPI from within the Paytm app. This integration also allows existing BHIM users to link their accounts with the BHIM API (application program interface) on Paytm. Additionally, new BHIM accounts can also be created from within the Paytm app.

The move to incorporate BHIM on Paytm is largely driven by the growing popularity of the platform and partly triggered by the Reserve Bank of India’s (RBI) mandate for stricter know your customer (KYC) norms for e-wallets in the country.

Last month, RBI directed companies and banks to make KYC-compliant prepaid payment instruments like mobile wallets interoperable within the next six months (bit.ly/2kMgUWn). Since its launch in December, BHIM has been downloaded over 16 million times and facilitated transactions worth Rs1,600 crore, as of 31 July, according to figures from NPCI.

UPI-based applications’ growing adoption can be attributed to the fact that an individual can move funds from one bank account to another bank account at no extra cost and it is faster than national electronic funds transfer (NEFT) or other traditional methods.

UPI has no waiting time to add a beneficiary and an individual is not required to share his bank account details and IFSC code.

Wallet services, on the other hand, require the customer to first upload money in the wallet and allow transfer to another wallet. However, transferring money back to a bank account usually attracts a fee.

For the same reason, customers are, in part, ditching digital wallets and moving to UPI-based platforms, but the move isn’t substantial because large wallet firms have a high number of merchant integrations, something UPI-based apps, including BHIM, are catching up with.

Mobile wallet transactions have declined or remained stagnant in the last three to four months. According to data shared by RBI, mobile wallet transactions declined by 10 million in August 2017.

Paytm said it will be training its 5 million merchant partners to create Paytm BHIM UPI ID and accept money using the same. Merchants will also get the flexibility of adding multiple bank accounts with the single Paytm BHIM UPI ID.

This will enable merchants on Paytm to be able to accept payments from a wider set of customers, the company said.

“As a part of our journey of being a truly open payment platform, consumers and merchants should both have complete range of choices to select payment source and destination. With the availability of BHIM UPI to our large user base and merchant network, we believe the next wave of digital payments will begin soon," said Renu Satti, managing director and chief executive officer, Paytm Payments Bank.

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