Aadhar Payment App to launch tomorrow

The government is working on an 'Aadhaar Payment App' that could end criticism of digital payments. The new app would eliminate the need for plastic cards and the point of sale machines, at one time believed to be essential for a less cash society. 

The app, set for launch on 25 December, would also eliminate the fee payments for service providers  such as Mastercard or Visa, which had been a stumbling block to merchants accepting digital payments.

This will make it affordable to even merchants in remote villages, according to people familiar with the development. Merchants only need to have an Android phone to be able to make transactions with the app.  

Merchants would need to download the Aadhaar cashless merchant app on their smartphones connected to a biometric reader, which was currently available for Rs2,000. The customer would then enter his Aadhar number into the app, select the bank through which the transaction would take place, and the biometric scan will work as a password for the authentication of the transaction.

"This app can be used by a person to make payments without any phone,'' Unique Identification Authority of India (UIDAI) CEO A B Pandey told ET. 

Earlier,  Pandey said in an interview to Business Standard, "We are looking at 250 million to 300 million people to use this service. Thirty million merchants are expected to use it. Our size should be to that scale. If people find it convenient and banks do the last mile work along with various arms of the government, to enable the merchants, daily transactions could jump five to six times from the 12.5 million now. 

The other important issue is when you make payments through other modes, there is a concept of MDR (Merchant Discount Rate). If you pay through debit card they charge you pay a levy on ad valorem basis. On Aadhar based platform, there will be no MDR. So, the customer is not charged anything extra and neither is the merchant."