BHIM to Expand Into E-commerce Through ONDC, Aiming to Challenge Google Pay and PhonePe

The government-backed payments app BHIM (Bharat Interface for Money) is set to join the Open Network for Digital Commerce (ONDC) to venture into e-commerce, aiming to rival dominant players like Google Pay and PhonePe in India’s digital payments sector, according to sources familiar with the matter.

Developed by the National Payments Corporation of India (NPCI), BHIM will establish a presence on ONDC’s platform to enable users to shop for a range of products, including food and beverages, groceries, fashion, and more. This strategic move is expected to bolster BHIM’s adoption and competitiveness against its established rivals.

An official knowledgeable about the initiative expressed optimism that integrating BHIM with ONDC’s e-commerce offerings will attract more users compared to Google Pay and PhonePe.

BHIM, built on NPCI’s Unified Payments Interface (UPI), was launched in 2016 but has struggled to gain significant market share, with Google Pay and PhonePe commanding a combined market share of nearly 85%.

Recent regulatory measures impacting Paytm have also led to a surge in BHIM app downloads, indicating a growing interest among users.

To strengthen BHIM’s prospects, NPCI appointed Rahul Handa, a former executive of ONDC, as Chief Business Officer for BHIM in March.

Industry experts believe that BHIM’s underperformance in the past was due to limited marketing budgets and the lack of focused initiatives for merchants and consumers. NPCI is now working on a BHIM 2.0 project to enhance user experience and drive growth through strategic partnerships like ONDC.

While ONDC has facilitated millions of transactions since its launch and attracted prominent businesses across sectors, experts caution that building consumer trust and changing behavior will be key challenges for NPCI’s B2C venture with BHIM.

In response to increasing concentration risks posed by Google Pay and PhonePe, NPCI is encouraging investments in new third-party UPI apps to diversify the payments landscape.

Overall, BHIM’s integration with ONDC signals a strategic shift to expand its reach and competitiveness in India’s dynamic digital payments ecosystem.