You must be well familiar with Aadhaar, a 12-digit unique identification number, issued by the Government of India to every citizen of the country. You need Aadhaar for pretty much everything. You need Aadhaar to get your LPG subsidy, to file income tax returns, to open a bank account or apply for a PAN card.
You need Aadhaar to get a new mobile number, to get scholarships and even concession on railway tickets. Soon, Aadhaar will be compulsory for buying shares and mutual funds. Aadhaar will be a game changer for the financial services sector in India. With Aadhaar Pay, you can buy your favorite laptop or smart phone, just by putting your finger impression on a device in a shop. You can say goodbye to swiping those credit and debit cards. Your thumb is now your bank.
Now to the big question. Are banks ready for Aadhaar Pay? Want to know more on investment planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
Prime Minister Narendra Modi, launched the BHIM-Aadhaar platform, on the 126th birth anniversary of Dr BR Ambedkar, after whom the payment system has been named. Aadhaar Pay has one main purpose. Promote digital payments among the economically backward sections of society, particularly those who are financially illiterate and cannot handle usernames, PINs, and passwords.
All these poor citizens of our country need to do is, use their fingerprints and make payments. This is very much possible as crores of citizens have already seeded their PMJDY accounts with Aadhaar. Aadhaar Pay can easily promote financial inclusion in India. Local kirana shops, medical shops, hospitals, fertilizer shops or ration shops can start accepting payments through Aadhaar Pay.
Shopkeepers, showrooms loosely called merchants need to install the Aadhaar Pay App. Merchants would have to download the Aadhar Pay App from the Google Play Store and connect their android smart phones to a biometric scan machine which costs around INR 2000, so that they can accept payments from you and other customers.
Merchants would have to register themselves on the Aadhaar Pay App and connect their bank accounts. If you (customer) want to make a payment using Aadhaar Pay, you have to link your bank account to your Aadhaar Number.
You (customer) will have to key in your Aadhaar number, enter the amount you have to pay and authenticate this transaction using the biometric reader. If biometrics match, your (customers) account gets instantly debited and money gets credited to the seller (merchant).
SEE ALSO: How to pay using Aadhaar Card?
The Government has given bankers a deadline...Install Aadhaar-driven PoS machines within the November 30th deadline. Banks are now rushing to meet this deadline. Amidst all this rush, some doubts have crept in. Banks are not too sure of the success of Aadhaar Pay in big cities.
Bankers are not sure if city customers who have multiple payment options like debit/credit cards or even mobile wallets, would be willing to share their biometric data with shops or stores. Then, crores of rupees would have to be invested to upgrade and secure millions of PoS devices with scanners, which capture your finger prints.
Yes...Aadhaar could be a great success in rural areas, but what about cities? Will merchants promote Aadhaar Pay where bank accounts get debited, instead of credit cards where they would get higher sales? Banks would have to upgrade more than 20 lakh PoS machines with external devices and obtain the necessary security certifications. All of this by November 30th. Currently, around 2 Lakh of the PoS machines have been fitted with these external devices.
Can banks meet the November 30th deadline and upgrade more than 20 lakh PoS machines with external devices?
When you use Aadhaar pay, your biometric data is transmitted in encrypted form. Your finger print image has to be guarded not only when it is transmitted to various organizations as you make payments, but also at the PoS points where your data is captured.
Your data gets transmitted between the acquiring bank, National Payments Corporation of India, UIDAI and finally your (customers) bank. Recently, there was a data breach at a major private bank, raising questions on the security of your biometric data. Could merchants store and misuse your biometric data?
UIDAI (Unique Identification Authority of India) has stepped in. It has set up specific standards for device manufacturers. These new specifications will secure not only the software but also the hardware.
Then there is the right to privacy vs Aadhaar debate. The Aadhaar Act is a valid law passed by the Parliament. The Supreme Court judgement has not said anything about the Aadhaar Act.
Currently it is compulsory for you to link Aadhaar with your bank accounts by December 31st 2017.
SEE ALSO: Aadhaar and the right to privacy
Yes, Aadhaar Pay is a great concept and has the potential to be a super hit among the rural masses. The success of Aadhaar Pay in cities, depends on banks. Can the banks adhere to the deadline to upgrade two million PoS machines with external devices and obtain security certification by November 30th....Only time will tell. Be Wise, Get Rich.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.