Cashbacks for all: Government splurges on BHIM, digital transactions

Till now, the government of India has spent close to Rs 500 crore in cashbacks for payment app BHIM. It wants to spend more. But Rs 500 crore is a lot of money. Taxpayer money. Is it being spent well?

The government's spending close to Rs 2500 crore to promote digital payments through cashbacks, including the UPI

BHIM had an outlay of Rs 495 crore for cashbacks. But it accounts for only 6.6% of all UPI transactions

The thing to watch out for is if these cashbacks cause enough behaviour change to displace cash transactions

Onboarding new merchants on a new payment system has its own challenges

Fancy yourself. What would you do with Rs 495 crore ($73.5 million)?

It could get you about 100 Lamborghini Aventadors. It could get you around three Boeing 747s. You could potentially buy almost half a percent in Flipkart, which is valued at over $20 billion. But if you are the Government of India, you’d do none of that. Instead, this was the amount the government was willing to spend on cashbacks for seven months (April 2017 to October 2017) to promote the usage of the Bharat Interface for Money, a payments application known more commonly by its acronym, BHIM.

AUTHOR

Shashidhar KJ

Shashidhar has been a journalist for over six years and has worked with The Times of India, The Financial Express and MediaNama, his last assignment. He is a fine bloke, and by that, I mean unusually quiet. Over the years, Shashidhar has written on several subjects. Banking, startups and technology, media, and also financial technology. He started his career on the desk at the old lady of Boribunder. At The Ken, Shashidhar works out of Mumbai and writes on telecom and financial technology. What he really wants to talk about though is his vinyl collection.

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