Aadhaar payments: All you need to know about the new Aadhar Pay app

In a bid to promote Aadhaar-based payment system, Modi government has launched a new Android app for merchants to accept payments using their biometric data or the registered data under UIDAI's Aadhaar number.

Aadhaar-based payment system is currently being used by 1,10,000 business correspondents for disbursing cash, and is also being utilised in Common Service Centres to pay for various services.

Here is all you need to know about the newly launched Aadhaar Pay:
How the new app will work?
After downloading the app, the user also needs to register with a valid ID. Then he/she needs to fill the required details to validate the transaction.

For Merchants: After downloading the Aadhaar Pay app from Google Play Store, the user has to install a biometric scanner linked to the user's smartphone. The user also needs to link his bank account to the phone so that the transaction can be completed.

For Customers: Customers need their Aadhaar number which has to be linked to their bank account. They can use either a fingerprint or biometric data to complete the transaction.

One of the main advantages of doing a transaction through Aadhaar app is that no additional charges will be levied unlike debit and credit cards.

Also, the installing cost for a biometric scanner for Aadhaar Pay is much more less than a POS machine. A POS machine costs Rs 5,000 whereas the biometric scanner will cost around Rs 2,000.
However, one of the limitation of Aadhaar app payments is that they can only take place if the internet is available.
Meanwhile, here are other related points about the newly launched Aadhaar Pay
The app has been jointly developed by UIDAI,NPCI and IDFC Bank. The Unique Identification Authority of India (UIDAI) is the nodal body responsible for rolling out the Aadhaar programme in the country. 

Transactions through the app would be made with the help of registered data under UIDAI's Aadhaar number.

Emphasizing upon the rural pockets of the country, UIDAI has favored "incentives" for merchants using the biometric mode for digital transactions, in line with commission given by banks to Business Correspondents.

Earlier this year, Ajay Bhushan Pandey, CEO of UIDAI told media, "If a merchant is using Aadhaar-enabled payment systems then he should be put at par with Business Correspondent and whatever facility and commission is available to the Business Correspondent, he should be paid on the same lines".

He also added that incentivizing shopkeepers who adopt the biometric payment system would also "remove an extra layer" as consumers today approach banks, ATMs or business correspondents for withdrawal of money to purchase items such as ration.

According to an Economic Times report, the Government is mulling over an option of giving banks an incentive of up to Rs 10 for each transaction. Quoting a government official, the report stated that a suggestion to provide an incentive of 0.25% on the value of a transaction - capped at Rs 10 - made on the biometric-based payment system Aadhaar Pay and UPI platform BHIM.

"The committee of secretaries had said that if they (banks) don't have incentives, they may not go and acquire merchants, so let them have incentives, and merchant will not bear cost and it may be borne from the financial inclusion fund," the official told ET.

Digital payment channels like mobile wallets, USSD and RuPay have seen massive uptake and rise in transactions post demonetisation on November 8. Even in case of Aadhaar-enabled payment system, the volume of transactions have jumped 2.5 times post demonetisation from 6 lakh a day before November to 15 lakh transactions per day at present.

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