With the evolution of the internet and technology, the world has transitioned to a digital form of banking along with other financial activities. In India, the digital payment system has really taken over, especially post-demonetisation and the popularisation of digital and cashless forms of banking that are also encouraged and supported by the Govt. of India. Post-COVID, the Indian economy has seen a massive leap from the traditional system of financial transactions to a more flexible and fluid form of monetary transaction brought about by the introduction of various digital payment platforms and tools like UPI and BHIM.

In this article, we will learn about two such digital payment tools, understand their mechanisms and functions, and understand what sets them apart. So, let us take a closer look at UPI and BHIM.

What are UPI and BHIM?

UPI and BHIM are two of the most commonly used words in the world of digital payments. "Can I pay you via UPI?" "Could you send me your UPI ID?" "I can transfer the money using my BHIM app." We have all heard such lines on a daily basis. From shopping at the neighbourhood store to travelling to paying for petrol to sending money to a friend or family member, these are such common occurrences. So, what are UPI and BHIM?

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What is UPI?

So first, let us see what UPI is-

UPI- which is the abbreviation for United Payments Interface, is a real-time payment system launched in 2016. The National Payments Corporation of India developed it under the aegis of the Government of India. The main concept behind UPI is to facilitate digital transactions in India, particularly the transfer of funds between different bank accounts using Smart devices like mobile phones. UPI essentially gives a platform for the transferring funds, paying bills, paying for goods and services,, etc., through different UPI-enabled digital payment applications.

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Features of UPI

Now let us understand the significant features of UPI-

1. It enables instant transfers of money between different accounts, which can be made possible from anywhere at any time.

2. Anyone can use it to link multiple bank accounts with a single UPI ID and use it as per their requirement, with the option to switch between different accounts for the same ID.

3. It supports both personal and business transactions. For example, you can conduct peer-to-peer transactions between different individuals for personal reasons and also conduct business transactions like paying for goods, services, online shopping, etc.

4. Operating through UPI is very simple, and transactions are hassle-free. They are done using a unique identifier called the VPA—Virtual Payment Address. This means that you do not need to input account details or any other information, eliminating the risk of having to share sensitive account details with others.

5. It can be used across any UPI-enabled platform, such as Google Pay, BHIM, Amazon Pay, Paytm, etc. It is not platform-specific or limited to just one platform—its usage is supported across all UPI-enabled third-party platforms as well as banking applications.

6. It is a hundred per cent safe and secure system backed by security measures like UPI PIN authentication and two-factor authentication.

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What is BHIM?

Now, let us take a look at BHIM

BHIM- is short for Bharat Interface for Money. BHIM is a digital payment application that was developed as an initiative to promote and support Digital India by the National Payments Corporation of India under the govt. of India. Like the UPI system, it was also launched in the year 2016 by then-Prime Minister Narendra Modi. As India was being ushered into a more digitally savvy nation with a cashless form of economy, BHIM was designed with that in mind and was widely promoted in all parts of India. It was the frontrunner among the digital payment applications in India and is very popular among the Indian masses. As an application, it helps user receive and send money, check their bank balance, make online payments for bills, etc, all through their smartphones. BHIM was designed to be a user-friendly application with a simple and hassle-free interface. It also works on the system of UPI.

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Features of BHIM

Some key features of BHIM -

1. It is a simple and convenient mobile application that enables users to transfer money, receive money, and pay for various things using their cell phones. It can be downloaded via the app store or Play Store and can be used on Android and iOS equally.

2. It is designed to be used by everyone and has few requirements, as it can transfer money with minimal internet connectivity. It also helps users who have cell phones with limited facilities transfer money through USSD.

3. Another important feature of BHIM is that it supports a multiple-language interface with many different regional languages in its database, which makes it accessible to a wide range of users within India who otherwise cannot understand or use English or Hindi.

4. It is a standalone application that is not limited to a single bank. It supports bank accounts of all banks across India and can be easily linked to any number of bank accounts the user may have.

5. It supports payment through QR or code scanning and can be used to make and receive payments from personal and business accounts.

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Difference Between BHIM and UPI

Now that we have understood the concepts of UPI and BHIM let us understand the difference between bhim and UPI-

Since BHIM and UPI are commonly used terms in digital payments, they might often be confused as being one and the same thing or the possibility of being interchangeably used. However, although NPCI backs both of them- they have specific functions and fulfil different objectives that are completely different to each other. Listed below is a comprehensive side-by-side comparison of UPI and BHIM and their differences that will help you understand their different nature

So are UPI and BHIM one and the same thing?- no, absolutely not. UPI and BHIM are not the same thing; one cannot be used as a substitute. The fundamental concepts of both are entirely different because the former is a system, and the latter is an application. However, we can say that BHIM can function on the system of UPI or rather BHIM and its digital transactions are done with the help of UPI. BHIM is one such application among many others, where it has been made possible for users to do digital transactions with such ease under the framework of the UPI system.

Does upi and bhim work together as they are both different?

This question might pop up to people confused about upi and bhim- the answer is yes, upi and bhim can work together; in fact, BHIM works on the framework provided by upi. Through upi, BHIM can facilitate digital transactions as a mobile application. Upi and BHIM together work to reduce the burden of cash dependency, achieve financial inclusion for all Indians, and make simple financial activities available and accessible to Indians across various strata. Both are backed by the Govt. of India and regulated by the NPCI- they both work together to simplify the financial needs of all Indians and help them gain agency over the way they spend their money and make payments. They may be different in concept but both rely on each other for achieving their specific goals.

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Conclusion

UPI and BHIM have revolutionised digital transactions in India and has been instrumental in helping India transition to cashless transactions. The entire infrastructure of digital payments has seen upi and BHIM as the cornerstone of the system that has brought a phenomenal change in how Indians view banking. From money transfers to payment of bills along with other financial activities, BHIM has managed to bring it to the comfort of people's homes and the accessibility to the tip of their fingers. Gone are the days when people had to line up in queues for the simplest of transactions. Today, money transfers take seconds to minutes and can be done at any time. This has also revolutionised the way Indians view banking and seen a huge leap in financial literacy. Upi and BHIM are now a part of every household and have changed the way people do transactions. Upi and BHIM have been responsible for helping people access financial services and reducing dependency on cash. They have also substantially helped merchants, both small and large, to eliminate the use of cash and card transactions as well. Sending and receiving have never been easier across homes, across towns, cities, districts and even states. There is no more need to visit banks for such things.

Upi and BHIM are not the same thing and have different functionalities, but they definitely work in tandem to help Indians do banking more easily. They have made digital transactions as easy as can be—right on the tip of our fingers.

FAQs

Are BHIM and UPI same?

No, BHIM and Upi are not the same thing—one is a system that facilitates online transactions through various digital payment apps, while the other is an application that allows you to transfer funds, pay bills, and make other forms of online payments.

Can we use UPI to transfer funds?

UPI is not a platform that helps users transfer funds; it is through UPI that fund transfers are made possible, but you do need a platform that allows digital transactions to make them.

Can I use him without the internet?

In low-internet or low-reception areas, BHIM can function on the basis of USSD, which facilitates transactions with minimal internet as well.

Can I use him to transfer money to another bank account?

Yes, you can certainly use BHIM to transfer money to another bank account through various mediums, such as bank account details, UPI ID, contact information, etc.

Is it mandatory to have a UPI ID for online transactions?

Online transactions can also be made using banking details like account numbers and details, but a UPI ID makes it easier to make digital payments.

Can we use multiple bank accounts for one UPI ID?

Yes, multiple accounts can be linked to one UPI ID; however, they cannot be used simultaneously. When one ID is being used, another has to be de-linked.

Can I link one BHIM app to all my bank accounts?

BHIM allows users to link multiple bank accounts to the same application. Its interface also allows users to easily switch between multiple bank accounts easily.

Can I change my UPI ID once it is made?

Yes, you can always change your UPI ID to suit your preferences.