New Delhi: The government on Tuesday prodded all banks to move to the Aadhaar Pay platform at the launch of IDFC Aadhaar Pay—the first Aadhaar linked cashless merchant solution, offered by IDFC Bank Ltd.
“All other banks must follow IDFC in adopting this model. If they don’t follow this lead, technology will make them redundant,” Amitabh Kant, CEO of the government think tank NITI Aayog, told reporters at the launch event.
Aadhaar Pay is a service for merchants which will enable them to receive payments from customers without any physical payment instrument. The Aadhaar Pay app has to be downloaded by merchants on their phones and linked to an Aadhaar biometric reader. Once the merchant has this infrastructure in place, consumers can start transacting.
To use this service, the customer has to first link his/her bank account to the Aadhaar number. To make a payment, the consumer just has to select the bank’s name and enter the Aadhaar number. The fingerprint is the password to authenticate the transaction.
“Our target is to reach out to 100,000 merchants in the next three years. No merchant discount rate (MDR) will be charged to merchants. In case a merchant is also a business correspondent (BC), then we would pay them for their services,” said Rajiv Lall, founder MD and CEO, IDFC Bank.
IDFC Bank will start television commercials from Tuesday to encourage more merchants to adopt Aadhaar Pay. Assistance on matters related to the installation or downloading of the app can be sought through the helpline number or the bank’s website. A bank employee will be sent to the merchant to help him/her with the use of the application.
IDFC claims the service has been launched after successful pilots across 16 states in a span of three months. Around 1,500 merchants have already enabled digital transactions for customers who used their fingerprint as a digital identity to carry out cashless payments.
Currently, the service has been rolled out only for small value transactions such as payment of grocery bills to vendors and purchases made at a milk booth and so on.
CEO of the Unique Identification Authority Of India (UIDAI), Ajay Bhushan Pandey said, “The model has been designed in such a way that higher value transactions can be done by introducing multi factor authentication. However, the limit on Aadhaar Pay must be decided among the banks or by Indian Banks’ Association (IBA).”
Currently, the transaction limit on Aadhaar enabled payments system is Rs10,000.