Apart from the convenience of paying with a tap of a thumb, the Aadhaar-based payment app may also end up being cheaper than payment systems (like credit and debit cards) which use Point-of-Sale (PoS) machines.There is a merchant discount rate (MDR) of about 1.0-2.5 percent involved in card transactions done through PoS machines which the merchants are required to pay. Aadhaar-based payments, meanwhile, happen at a much lower cost since there’s no MDR involved, the IDFC official said.
This is because the network is developed by the National Payments Corporation of India (NPCI) on the existing Aadhaar Enabled Payments Systems (AEPS) railroad used to authenticate customers at public distribution centres. In merchant transactions, the same infrastructure is being utilised to authenticate customers as well as their bank accounts.A white paper on service delivery using Aadhaar published in 2012 said:The interoperable architecture of AEPS and micro-ATMs enables online and real-time fund transfer across banks, thus enabling an efficient and cost-effective remittance ecosystem.

Can Banks Scale Up?

How Do These Apps Work?

Theoretically, the reach of Aadhaar-enabled payment application could be higher than that of the NPCI’s Unified Payment Interface, which requires the user to have a smartphone.“It’s quite intuitive, and is the logical next step for payments in India. But, the main challenge for banks and the government will be merchant acquisition. For this service to work, a large network of merchants need to get on board,” said Vivek Belgavi, Partner and Financial Services and Technology Consulting Leader, at PwC in a telephonic interaction with BloombergQuint. According to Belgavi, the fingerprint scanner, at less than Rs 5,000, can be much more pervasive than point of sale devices.
Are digital payments finally set to become easier for merchants as well as customers? The answer is yes if one goes by the government’s promise of introducing a universal app that merchants can use to accept payments even from people who don’t have a mobile phone or a debit card. The only thing you need is a bank account linked to your Aadhaar number.While the formal launch of the government’s app is still awaited, banks like State Bank of India (SBI) and IDFC Bank Ltd have launched their Aadhaar-based payment systems. On Saturday, SBI adopted Shirki Village in Maharashtra to make it completely cashless on the back of its Aadhaar enabled payment solution.
IDFC Bank, too, launched its Aadhaar-based platform over the weekend. Both lenders promised a payment experience more seamless than any other.Mrutyunjay Mahapatra, deputy managing director at SBI, said in a media statement.The simplicity of this solution is its USP as the consumer does not have to struggle with any technology, remember any password or PIN to make an instantaneous payment.Rajiv Lall, founder and chief executive officer of IDFC Bank had a similar pitch to make and said in a statement that even “citizens in the deepest corners of the country can participate in India’s digital movement” if they have a Aadhaar-linked bank account.
IDFC Bank’s Aadhaar Pay app gives us some idea of how these payment systems will work. The app, which can be installed on a retailer’s smartphone, just needs a biometric device which scans a customer’s fingerprints for authenticating transactions. The customer just needs to know the name of the bank.
The bank has already onboarded 100 merchants who are using the Aadhaar-based payments app, said an official from the bank requesting anonymity. The government will be using IDFC’s app to model the umbrella app that they intend to launch, this official added.After demonetisation, Government is facilitating Aadhaar number-enabled financial transactions through mobile phones as part of its drive to convert the country into a cashless economy. Now people will be able to make payments using their Aadhaar cards.
This post will tell you how to pay using Aadhaar card.
Economic Times quoted the director general of Unique Identification Authority of India (UIDAI), Ajay Pandey saying, “Aadhaar-enabled transactions are card-less and pin-less. This would enable Android phones users to digitally transact using their Aadhaar number and fingerprint/iris authentication”.
As you know, India is moving towards a cashless society. This transition phase from cash to no cash transactions enabled many E-Wallet companies like Paytm & Freecharge to grow exponentially. To continue day to day life payment system is a must. People have started using different alternatives to tackle cash crunch India is facing after demonetisation. People use plastic money more than ever before. Paytm is a name that has grown immensely popular. Even road side vendors have started using Paytm to accept payments.
Now Government wants Aadhaar-enabled payment to replace debit, credit cards. People can now pay using aadhar card. It means you don’t need to have plastic money or e wallets anymore. All you need is an aadhar card to make payments.The initiative can help the government deal with situations like recent demonetisation. Also it will help curb black money menace and bring in more financial transaction transparency.The government is working on developing a common mobile phone app. This app can be used by shopkeepers and merchants for receiving Aadhaar-enabled payments bypassing credit and debit cards, pin and password.

How To Pay Using Aadhaar Card ?

AEPS in its initial form

AEPS (Aadhaar Enabled Payment System) in its basic form is a machine known as micro ATM. This machine is similar to POS machines that accept credit/debit cards. The only difference is that instead of any card you need to authenticate your payments using your bio metrics (usually fingerprint).

How does AEPS machine work?

A merchant who needs to accept payment will enter the aadhaar number and the amount in the machine using the touch interface provided. The customer then needs to authenticate the payment using his/her fingerprint. The amount will be deducted from a bank account that is linked to customers aadhaar number and credited to the merchants bank account.

Aadhaar Pay Merchant App (AEPS recently introduced)

A merchant will have a smartphone with a finger print scanner connected to it via an application. You will have to place your finger on that scanner to pay using aadhaar. Your bank , which is already linked to your aadhaar number will be debited with the amount you pay to the shopkeeper.

Aadhaar Pay Merchant App – How it works?

UIDAI has introduced the much awaited Aadhaar Pay Merchant App. Using this Aadhaar Payment App, merchants can accept payments which will be Cashless, Cardless and Pinless.
  1. To accept payments, merchants needs to register on the app using the aadhaar number. The registration needs to be authorised using the fingerprint of the merchant.
  2. Now to accept any payment from the customer, the merchant needs to enter the customer details which include customer aadhar number, customer bank name, and amount to be paid by the customer.
  3. An option to continue or to reject the payment will be provided. Once choosen to proceed, the payment needs to be authorised using the customer’s finger print.
  4. After successful authentication, the amount will be transfered from the customer’s aadhaar linked bank account to merchant’s aadhaar linked bank account.