Digital payment drive struggles to take off in rural India, shows audit
The Narendra Modi government’s pet digital payment projects — the mobile money transfer application BHIM and the Aadhaar-based merchant payment system BHIM-Aadhaar — will need rejigging and a more thoughtful implementation process if rural mass adoption is to be achieved.
An internal study commissioned by the National Payments Corporation of India (NPCI), a public sector bank controlled entity involved in floating and managing the payment system, has revealed that poor awareness and a flawed user experience has resulted in a high number of rural users “who have either deleted the application or are inactive”.
In the months after demonetisation, the Centre has embarked on an aggressive digitisation push that, as The Wire has reported, has been aggressive if not wholly effective.
In December 2016, Prime Minister Narendra Modi launched a UPI-based mobile application called BHIM (Bharat Interface for Mobile) and claimed that “the day is not far when all business transactions will be conducted through the BHIM app”.
And yet, BHIM hasn’t made it that far. Although the application has seen nearly 20 million downloads, data shows that less than 30 per cent of the people who have downloaded the app have actually linked the app to their bank accounts and engaged in active transactions.
Less than six months after BHIM’s launch, Modi inaugurated the roll-out of the BHIM Aadhaar platform, a payment interface for merchants who could link Aadhaar authentication to the BHIM application.
“NPCI understands that BHIM hasn’t really taken off and wanted to analyse the reasons why. And for Aadhaar Pay, the merchant system, they wanted to understand the road bumps after the initial roll-out happened. This is why they commissioned the study,” a person with direct knowledge of the matter, who declined to be identified, told The Wire. BHIM: Who, what and why A five-state qualitative study carried out by Micro Save — a survey-firm well known for its critical insight on the implementation of the Jan Dhan Yojana programme — shows that most semi-urban and rural Indians surveyed have a limited understanding of the “why and how” of BHIM.
However, the BHIM Aadhaar merchant payment system has bigger fish to fry. The idea behind it was simple: customers can make payments using their Aadhaar number and a merchant’s special biometric device. When the platform was launched, the Centre also promised that banks would roll-out Aadhaar-enabled PoS machines — essentially cheaper biometric devices when compared to the more expensive traditional PoS devices that had greater MDR charges.
In February 2017, finance minister Arun Jaitley stated that banks “will be encouraged to introduce two million Aadhaarbased POS by September 2017.”
Although Micro Save notes that the Bhim-Aadhaar payment system and accompanying devices are “good products”, they come with restrictive limits (such as a ~2,000 ceiling per transaction) and lacking necessary features (such as the ability for a merchant to produce a consolidated report of all transactions conducted).
In the few states that rollouts have started, merchant selection and the on-boarding process hasn’t been done well. “Suitability of merchants was not verified before providing them the device. This resulted in the merchants either not using the device or reduced usage of the device,” the study states. Merchants that Micro Save spoke to pointed out that the absence of a grievance redressal mechanism also hurt transaction transparency and caused customer trust issues.
“…Were unaware about whom to approach in case of any transaction failure or any other technical glitches etc. Merchants reported that for certain customers, transactions did not get through, as they have an account in a bank which is different from the BHIM-Aadhaar Pay issuing bank. They were unaware as to whom to contact for reporting this issue,” the study noted. The payment platform is also restricted, with merchants able to see only day-today transactions conducted by them. “A consolidated report with all the transactions conducted so far was not available to them. Merchants were also not able to download or print the transaction reports and needed to visit the bank to get their passbook updated,” the audit states. The feedback that has been given to NPCI is that issuer banks need to have “pre-defined criteria for merchant selection”, taking into account average transaction value and that once on-boarded, shop owners needed to be given “training on installation, device operations and product features”. Broader awareness push Awareness issues extended to even basic usage of the BHIM app. “The number of users who have either deleted the application or are inactive are high. One of the reasons is lack of knowledge about how to use BHIM and, more importantly, why it should be used, what are its USPs compared to the other modes they use. This could be a result of limited visibility of the marketing campaigns. Hence, they do not put the cognitive effort to shift from their existing modes,” the study notes.
The issues start with when users start opening the BHIM app. “It was observed that respondents felt hassled when they did not immediately understand what task needs to be performed at each screen, how it is to be performed, and if there was some error due to incorrect entry.” The greatest amount of trouble comes during the “setting up the UPI pin” phase, with users “not used to entering and remembering six-digit codes”. Micro Save’s feedback for smoothing out these implementation issues is to make “use-cases of BHIM more relevant to the daily lives of the customers” and including “in-app instructions to ease the process flow”.
“It’s clear that greater vernacular aid needs to be given as part of the app and perhaps a redesign of some user interface features to focus more on images and less on unnecessary text and numerals. This will happen in the next few months,” a senior NPCI official, who declined to be identified, told The Wire.