After a surgical strike into cash economy, the Government of India has come up with several initiatives to move towards less cash economy. However, several criticisms have come against the government saying it is promoting certain private companies like Paytm, Mobikwik etc which are getting commission out of the digital transactions. Government had brought Unified Payment Interface (UPI) which was much easier means of money transfer through digital means.

In addition to this, the Government has launched Aadhaar Payment App on December 25th, Good Governance Day. The experts opine that this will help merchants even in remote villages.

How it works?

The merchants have to download the Aadhaar payment app on their smartphones. They will have to connect it with a biometric reader which costs around Rs. 2000. The merchant has to validate own identity first through his/her Aadhaar number and finger print through biometric reader. In order  to receive payment, the merchant has to feed the customer’s Aadhaar number into the app, select the bank through which the transaction has to take place. The finger print of the customer is registered through the biometric reader which authorises the payment.

In the recent times, PM has been quoting a new slogan, “your mobile is a bank”. But if Aadhaar payment app is adopted by large number of merchants, then even if you don’t have your phone or purse in your hand, still you can make a payment to the merchant!  Unique Identification Authority of India (UIDAI) CEO Ajay Bhushan Pandey  said, “Almost 40 crore Aadhaar numbers already stand linked to bank accounts – that is half the adults in India. The aim is to link all Aadhaar numbers with bank accounts by March, 2017.”

IDFC Bank along with UIDAI and National Payments Corporation of India have developed this app.

Rajiv Lall, MD & CEO at IDFC Bank  said “The settlement is done through the Aadhaar bridge, which means it con nects a much wider set of people.”

“Anybody who has Aadhaar seeding done can make payments to merchants with this app. It wouldn’t matter if the person does not have a credit or debit card, or even a mobile phone,” he added.

After demonetization, many merchants have purchased Point of Sale (POS) machines. However, the acceptance of POS terminals in the country has been slow with only 15 lakh terminals deployed by various banks. SBI alone has deployed over 3 lakh terminals followed by HDFC Bank and ICICI Bank. Even in POS, the commission of 2 – 3% has to be paid to companies like Mastercard or Visa. That will also be saved with Aadhaar Payment App.

Thus, this app can help in digitizing Indian economy much more faster than the present pace.


Akshara Damle

You can reach the author on Twitter @aksharadamle

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