Does BHIM’s launch impose any threat to Paytm? What happens next in this digital race is something only time will speak of.

Absolutely !! Infact, why do we need any payment wallet now that there is BHIM (new version of the earlier UPI, etc) ? Lets look at the functionality of both to begin with.

Paytm or any other wallet works like this: You have a bank account which you link to the e-wallet. Now you TRANSFER money from bank account to the e-wallet ( at a cost or free depending on the provider). Then you can pay using this wallet app to the other peers or merchants thru their mobile number or merchant id/scan code. This works exactly like a PRE-PAID card system.

bhim app Where Would The Race Between Paytm And BHIM End Up?

The money you transfer to the e-wallet is the BALANCE you have on the pre-pay card. You can’t exceed the LIMIT. Also the money lies IDLE on the e-wallet until used which means that you are encouraged to SPEND the entire money that you transfer to the wallet. The idle wallet money DOESN’T PAY INTEREST unlike savings account. This gives the e-wallet companies a HUGE surplus that they can INVEST elsewhere to earn good returns.

Now why do i need a THIRD PARTY like a E-WALLET? All they do is to facilitate the transfer of money from you to the merchant. This was anyways done by the debit card/credit card or pre-paid card. The only improvement is CONVENIENCE & ACCEPTANCE. If somebody can solve for these these two issues DIRECTLY FROM MY BANK ACCOUNTS, we don’t need e-wallets. Plus my money can stay in my account & I won’t have to bother about it lying IDLE somewhere in some wallet.

Additionally, there is the issue of absence of inter-wallet transfer. All wallets are closed networks. So unlike bank accounts where money can be transferred from one bank to another, wallets need BOTH parties to have the SAME WALLET provider. There are 15 plus wallets from banks & then there are other providers like paytm, mobikwick, etc. Would you like a bank account where you can deal with only the same bank customers ? No inter-wallet operations are possible. That is why this huge rush by paytm to be the first mover & get BOTH customers & merchants to accept this.

bhim android1 Where Would The Race Between Paytm And BHIM End Up?

BHIM exactly solves for all of the above issues. It transfers money from your account to merchant or any other person & all this platform is facilitated by the govt. What better can you ask ? So you can receive money from someone with BHIM id being YourCellNumber@upi is 98xxxxxxxx@upi. Similarly you can transfer money to merchant & others by TheirCellNumber@upi. All this from your bank account itself. whats best, there is NO CHARGE WHAT SO EVER for this either for the sender or the receiver. So why would you use cash(white money) ever if everyone has a linked BHIM account ?

I would like to hear from anyone who says we still need e-wallet companies. With all my judgement, I can’t figure out a single reason to download paytm or any e-wallet. Lets see how the future unfolds but will be interesting to see this battle between govt & wallet companies+banks.

Answered by Anurag Singh at quora

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