Mobikwik’s co-founder and CEO Bipin Preet Singh has criticised BHIM, the government-backed UPI app and its cashback offers. Singh suggests that while the government funded cashback scheme was designed to benefit the entire UPI ecosystem, it only ends up benefiting the BHIM app and its user base. This basically means that the government-funded cashback incentives are not applicable to non-bank apps or third-party payment providers such as Mobikwik, Google’s Tez, PhonePe and others who run on the same UPI platform.
“Its incredible that both private and public sector bank apps get the benefit of Govt promotions but startup apps (which follow same level of compliance) & which are attracting much valuable FDI, creating new technology & thousands of new jobs are denied this opportunity,” Singh writes in a blog post on Medium.
As per NPCI’s circular, the cashback scheme which was started in 2017 was supposed to be till March 2018 but has been extended for another year. The circular states that a consumer who uses either the BHIM application which is run by the NPCI or a bank-led UPI application is eligible for cashback on unique UPI transactions. The minimum value of such transactions has to be ₹100 and users can get up to ₹25 for a maximum of 20 transactions per month. For repeat transactions, the government offers cash back up to ₹250 per month. So on paper, a user could stand to earn up to Rs 750 in cash backs every month.
“So here’s the thing — you will make ₹750 per month if you’re an ICICI Bank user and use the ICICI Bank app (or the special BHIM App) to make UPI payments, but in case you found the UX of MobiKwik (or PhonePe or Google Tez or WhatsApp) better, you won’t get any cashback even though you end up using UPI and the same bank account,” Singh explained in his blog post.
Mobikwik isn’t the only one that is complaining though, PhonePe’s VP of payments told the Economic Times that, “With UPI being renamed as BHIM UPI it is creating confusion in the market among consumers and merchants as transactions on few apps are eligible for cashback but on 3rd party platforms they are not eligible. It would help to expand the cashback scheme across all players.”
In May, Mobikwik launched UPI-based payments on its platform. Following the launch, Mobikwik users were able to make and receive payments via their @ikwik Virtual Payments Address (VPA).
UPI space getting crowded
As mobile wallets are seeing a slump in usage, the addition of UPI seems like a prudent move for Mobikwik. But the UPI space is getting both crowded and competitive. On top of that, the interoperable nature of UPI means that customers move between apps, or use multiple apps as and when they see fit.
Google Tez, Paytm, the Flipkart owned PhonePe, Whatsapp’s payment service and the government-backed BHIM app are all going to be key competitors for Mobikwik. Some like Paytm and Google Tez have tried to drive their numbers by offering cashback rewards for signing up, making bill payments or transferring money.