The Prime Minister Narendra Modi, launched the BHIM-Aadhaar App on the Birth Anniversary of Dr Bhim Rao Ambedkar, the Father of the Indian Constitution which falls on April 14th. This bold move could change the face of the payment sector in India. What's special about the BHIM-Aadhaar App? Using the BHIM-Aadhaar App, you can make purchases without credit/debit cards or even a smart phone. Yes...you heard me right. You don't require a smart phone to make a purchase, if you use the BHIM-Aadhaar App.
After demonetization, the use of digital modes to make payments, has gone up in the country. You and other citizens use debit/credit cards, mobile wallets, UPI, USSD, internet and mobile banking and now.... the BHIM-Aadhaar App. Digital payments have grown 57% in FY2017.
Can the BHIM-Aadhaar App be the game changer in cashless payments, the country so badly needs? Yes...Why do you think leaders of so many African countries are interested in similar Apps? Want to know more on financial 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.
The BHIM-Aadhaar App is a system which allows you to make payments using your thumb impression. This app will be available for download to retail merchants across India, but not for corporate merchants. For you to make payments using the BHIM-Aadhaar App, merchants will have to purchase fingerprint scanners.
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For you to use the BHIM-Aadhaar App, merchants have to download the BHIM-Aadhaar Pay App, popularly called Aadhaar Pay. Aadhaar Pay is the merchant version of AEPS (Aadhaar Enabled Payment System).
Step 1 : Merchants such as shopkeepers and showrooms will have to download this app from Google Play Store by searching for 'Aadhaar Pay'. The merchant then connects this app to his bank account. The merchant has to link his smart phone to a fingerprint scanner to collect payments from you. The merchant can now log in to Aadhaar Pay with his Aadhaar number using the fingerprint scanner. After the validation of the app, the merchant can use it to accept payments.
Step 2 : If your bank account is linked to aadhaar, you can make payments by authenticating your transactions, using your fingerprints. This app uses your fingerprints as the password. You don't need to remember any PIN, MPIN or IFSC code to make the payments. Now, all you have to do is enter your Aadhaar Number on the merchant's phone. The app will fetch all bank accounts which are linked to your Aadhaar number. You then have the choice to select the bank account from which you want to make the payment.
Merchants download the Aadhaar Pay and you enjoy the benefits. You do not need a debit or credit card or even a smart phone to make payments using Aadhaar Pay. Why....you don't even need an internet connection. Merchants love Aadhaar Pay. This is because they don't require a POS machine to accept payments. The merchant is also not charged the MDR (Merchant Discount Rate), if he uses Aadhaar Pay.
What is MDR? Merchants install POS machines at their showrooms. Customer then swipe credit/debit cards of various banks at these POS, to make payments. When a customer uses a credit/debit card of a particular bank, that bank charges the merchant a fee called Merchant Discount Rate popularly known as MDR.
A merchant will not be charged MDR if he uses Aadhaar Pay. Do you know why cashless transactions are struggling to take off in the country? Card Companies like 'Mastercard' and 'Visa' charge 2-3% fees. With Aadhaar Pay these fees will be eliminated. All the merchant needs is a fingerprint scanner which costs about INR 2000....a one time cost.
You are an existing BHIM user? There's good news for you. Yes, I am talking about the BHIM Referral Bonus Scheme. You (existing user) get a referral bonus, if you bring new users on the BHIM Platform and encourage them to make transactions on this new platform. Both you (referrer) and the new user of BHIM, will be paid a bonus. The referral will be considered successful only if the new user makes 3 unique successful financial transactions.
How does the BHIM Referral Bonus Scheme work? Let's say you refer your friend to the BHIM platform. Both you (referrer) and the referee (new user), get paid a bonus amount.
If your friend completes 3 unique successful transactions totaling just INR 50 to any 3 unique users (these can be customers or merchants), both the referrer and the referee, get a notification from the BHIM App about the bonus amount. You (referrer) get INR 10 per successful referral and your friend (new user) gets INR 25 for downloading and transacting using the BHIM App.
This scheme encourages not only adoption of BHIM by the merchants, but also transactions. Merchants are encouraged to transact using the BHIM Mode via QR Code, VPA, Mobile Number or Pay to Aadhaar. A merchant can win up to INR 1800 in 6 months via cashbacks.
For centuries the thumbprint was a sign of illiteracy. Today, it's a sign of empowerment. Yes, you can make payments with just your fingerprints. Something quite unimaginable a few years ago. Be Wise, Get Rich.
Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.