How BHIM app users are making easy money by using govt's cashback scheme

Wasim Akram (name changed), an engineering student in Kolkata, has been leaving his phone number on internet forums for the last six days. 

Akram saw a video, which purportedly tells people how to make Rs 750 a month by just doing transactions through the Unified Payments Interface (UPI). Now, he is busy looking for 20 people on the internet who can receive payments from his phone and give it back to him just so that he can earn the cashback.  “There are many active WhatsApp groups where people join and leave their virtual payment addresses to increase their monthly transactions and receive cashback. All my friends are doing it but since unique transactions are required, I am looking for my own set of partners,” Akram said over the phone. 

Akram is not alone. Lakhs of people have monetarily benefitted from the government’s digital payments push by just transacting on UPI and routing money from one account to another. This is because of the new Bhim-UPI cashback scheme for individuals which was launched this financial year with a budget of around Rs 5 billion for six months, according to sources. The scheme was reviewed and renewed in March 2018 by the ministry of electronics and information technology which issued a circular amending its earlier gazette notification to expand the scope of the scheme. 

“Increase in the number of users downloading, installing and linking Bhim App with their accounts and making first successful financial transactions,” is one of the stated objectives along with “increase in the number of transactions with the Bhim UPI”, which is the second objective.
 

As part of the scheme, the government is offering a cashback of Rs 25 per transaction done through Bhim or any of the bank UPI apps. This cashback can be availed by an individual up to 20 times a month, thus resulting in a net earning of Rs 500 for just routing money from one account to another, Akram said. 

Similarly, additional Rs 250 are given to users for transferring money to any account if the total number of transactions are more than 100. Interestingly, it doesn't have to be a different person for these 100 transactions as in the case of the Rs 25 per transaction cashback. 

While the scheme has been in place since last year to boost digital transactions through UPI, its scope was expanded in the latest iteration launched in April to include individuals transferring money between themselves while earlier only Rs 25 was available to individuals and only once on signing up. The scheme, operated by the National Payments Corporation of India (NPCIL), which runs the UPI platform, has already resulted in an expenditure of about Rs 65 crore in the months of April and May while data for June is yet to be compiled, said a government official. 

The official added that the scheme is helping boost UPI transactions across the board on banking apps and it will be assessed in the next six months and a decision on its extension could be taken. 

“The transactions are definitely rising because of cashbacks and that's our stated aim too. There's no problem if people are incentivised to come online and a large number of people are joining UPI,” he said. But an NPCI official said that with the new scheme, banks are benefitting too as the cashback scheme is expanded to include all bank apps apart from the government's Bhim app. This has resulted in wider adoption of payment systems and the government should take steps to bring more people into the fold, he said. 

Meanwhile, the availability of cashbacks to only banks has led to some discontent in the industry where third party players such as Mobikwik, WhatsApp and Google Tez also operate UPI in partnership with banks. 

Bipin Preet Singh, CEO of Mobikwik, wrote a blog post on Sunday claiming that it's unfair if third party apps do not get to provide their users with the same cashback benefits as other private and public banks do. Speaking to Business Standard, he even claimed that he has heard of the payment bank accounts being opened just to claim these cashback benefits which goes against the spirit of the government's objective. 

“If you had to restrict third parties, you should have restricted payment banks too. A private bank won't let you open more than one account easily but on a payment bank, you can open as many accounts with different numbers just to receive cashbacks. Lots of people are using it,” he said. Singh added that all cashbacks are prone to being misutilised by users but said that the scheme could have been designed in a better manner.