FinTech

Aadhar Pay

Aadhar Pay is an Aadhar Enabled Payment System (AEPS) by UIDAI and NPCI. It eliminates the need of a debit card Or mobile wallet like paytm, mobikwik etc Or even a smartphone to make payments. One just need to have their bank account linked with aadhar number and fingers to pass through fingerprint scanner. No need to remember any pin or password either.

How it works?

  • Merchant requires to install Aadhar Pay App such as IDFC Bank UPI App (currently avaialable for android devices only) and then register to start using it.
  • Merchant should also buy a fingerprint scanner which are easily available these days on e-commerce portals (for ex. on flipkart). Connect it with the mobile phone
  • Customers need to feed their aadhar number into the merchant’s app for payment.
  • App will display all the linked bank accounts. Customer will choose the desired bank, if multiple bank accounts are linked to the same aadhar number.
  • Customer will put his finger on the fingerprint scanner which is connected to the phone. The scanner will collect fingerprint data and send it to the app.
  • App will validate the fingerprint with the data available inUIDAI‘s database. On successful validation NPCI‘s system will get a go ahead to perform money transfer.Money will immediately be transferred from customer’s account to merchant’s account.

One of the limitation of Aadhaar app payments is that they can only take place if the internet is available.

However, it takes away the usual 2% fee merchant pays for traditional pos based transactions and money transfer is instant to merchant’s account unlike traditional methods where merchant has to wait for the settlement cycle.

It will also be helpful for customers to get rid of plastic cards, lost/stolen card, hassle to remember pin/password or managing multiple mobile wallet or toping them up with money.

Overall it’s one prominent steps towards a ‘less cash’ society for better.