BHIM to challenge Google Pay, PhonePe e-commerce dominance through ONDC

BHIM will expand its presence in e-commerce by offering a diverse range of products and services, including food and beverages, groceries, fashion, and apparel to its user base

Government-backed payments app BHIM (Bharat Interface for Money) is preparing to make its foray into the e-commerce sector via the Open Network for Digital Commerce (ONDC), according to a report by the Economic Times. This move aims to challenge the market dominance of Google Pay and PhonePe, according to sources familiar with the matter.

BHIM, developed by the National Payments Corporation of India (NPCI), will leverage ONDC’s platform to expand its presence in e-commerce. The initiative, expected to be launched through a separate division, seeks to enhance BHIM’s user base by offering a diverse range of products and services, including food and beverages, groceries, fashion, and apparel.

While both Google Pay and PhonePe currently command a significant share of India’s digital payment market, BHIM’s integration with ONDC presents an opportunity to level the playing field. The move comes amidst a surge in BHIM downloads following regulatory constraints imposed on Paytm, the third-largest player in the sector.

Rahul Handa, former executive vice-president for strategic initiatives at ONDC, has been appointed as the chief business officer of BHIM, as part of NPCI’s efforts to strengthen the app’s market position.

Despite its launch in 2016, BHIM struggled to gain traction due to limited marketing budgets and a lack of consumer awareness. NPCI’s upcoming BHIM 2.0 project aims to revitalise 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.

As earlier reported by Business Standard, 5-7 million, or 25 per cent, of the merchant base at Paytm had also begun migrating to competitor platforms, including BHIM. This also provides a significant opportunity for the platform to expand its reach.