On Friday, Prime Minister Narendra Modi launched a new payment app called Bharat Interface for Money (BHIM) to encourage digital payments. This Unified Payments Interface or UPI-based app links your smartphone and mobile number with your bank account to enable making payments.
Setting up the payment process on your mobile device is easy. Once you have download the app, you'd be asked to choose a language and proceed. The app will then 'bind' and verify the smartphone number through its unique IMEI number. The government has worked with the banks so that details of your account can be fetched and tied with your phone number. There might be concerns related to privacy among people. You will have to set up a 4-digit UPI PIN as well which will be used to log in to the app and authorise transactions.
After feeding your bank account number, you will get a string that can be used as your UPI account number for requesting or sending payments. For instance, if your mobile number is 9876543210 then your UPI account would be 9876543210@upi.
The BHIM app has all the functionalities of a mobile wallet, except that you don't have to add money to use it. You can pay money to someone through their UPI number or even their account plus their IFSC code. If you request someone for money with your mobile number or payment address, a notification is sent to them for payment. The app also verifies if that number is tied to UPI or not.
A great thing about BHIM is that you can use it offline through USSD as well. You would have to dial '*99#', access the menu and make or request payment, all without requiring an Internet connection.
There are a few downsides as well. Currently, the app is only on Android platform with the iOS version coming soon. Setting up or making payments might take several attempts. The bugs could be related to the network or the app. When we tried to request the balance or log out from the app, it didn't work as expected.
Right now, the app only lets you bind one account to the smartphone and the app. However, it is quite possible that your mobile number is tied to multiple bank accounts. BHIM supports over 30 banks in India, including all the major banks.
There is no charge on payments levied by the app, but the bank might charge a nominal fee for UPI usage. The daily transaction limit is ₹20,000 at the moment. The app is very easy to use but it remains to be seen how quickly people begin using it and how the government ensures that the large amount of data BHIM will gather is secured.