Challenging the Market Leaders
The government-backed payments app BHIM (Bharat Interface for Money) is gearing up to enter the e-commerce sector through the Open Network for Digital Commerce (ONDC). This move is seen as a direct challenge to the market dominance of Google Pay and PhonePe, which currently hold a significant share of India's digital payment market.
BHIM's integration with ONDC presents an opportunity to level the playing field, especially considering the recent surge in BHIM downloads following regulatory constraints imposed on Paytm, the third-largest player in the sector. The appointment of Rahul Handa, former executive vice-president for strategic initiatives at ONDC, as the chief business officer of BHIM further signals NPCI's efforts to strengthen the app's market position.
Despite its launch in 2016, BHIM initially struggled to gain traction due to limited marketing budgets and a lack of consumer awareness. NPCI's upcoming BHIM 2.0 project aims to revitalize the platform's user experience and drive adoption through strategic partnerships like ONDC. However, industry analysts caution that solely relying on ONDC may not be enough to overcome entrenched consumer habits and preferences.
The high concentration of transactions on platforms like Google Pay and PhonePe has prompted NPCI to encourage investment in new third-party payment apps on the Unified Payments Interface (UPI). This diversification strategy aims to mitigate risks associated with over-reliance on a few dominant players.
Furthermore, the migration of a significant portion of Paytm's merchant base to competitor platforms, including BHIM, provides a substantial opportunity for the app to expand its reach and establish itself as a major player in the e-commerce sector.