PM Modi to launch Aadhaar Pay app today: Guide to how it will work

Narendra Modi
Prime Minister Narendra Modi on Friday will release the Aadhaar-based mobile app which will enable digital payments using biometric data. One would be able to make digital payments without having a mobile phone, internet connection, debit or credit card.

The new interface would be launched in Nagpur on the ocassion of 126th birth anniversary of Bhim Rao Ambedkar, the architect of Indian constitution. 

A statement issued by the NITI Aayog said that the BHIM-Aadhaar (Bharat Interface for Money) merchant interface would pave the way for making digital payments on the Aadhaar platform using biometric data like thumb imprint on a merchant's biometric enabled device.

"Any citizen without access to smart phones, Internet, debit or credit cards will be able to transact digitally through the BHIM-Aadhaar platform, thus realising Ambedkar's vision of social and financial empowerment for all," the statement said.

27 major banks were already on board with around three lakh merchants so that they can start accepting payments using BHIM-Aadhaar, it further said. 

During the event, Modi will also launch two new initiatives to push digital payments - cash back and referral bonus schemes - with an outlay of Rs 495 crore for a period of six months.

"Under the referral bonus scheme, both the existing user who refers BHIM  and the new user who adopts BHIM would get a cash bonus credited directly to their account and Under the cashback scheme, the merchants will get a cashback on every transaction using BHIM," the statement added.

Here are the key things you should know about Aadhaar Pay:

What is Aadhaar Pay:  Aadhaar Pay is the merchant version of the Aadhaar Enabled Payment System (AEPS). It will benefit those who do not have debit cards, mobile wallets. The app would also eliminate the fee currently being charged by the private card companies such as MasterCard and Visa.

How to Use Aadhar Pay App: Merchants would just need to download the app and connect their smartphones to the biometric scan machine to accept the payments from customers. The merchants would also be required to connect their bank accounts and register themselves on the app.

The Aadhar Pay app by IDFC bank can be download only by the link sent to the merchant’s mobile number after e-KYC verification of merchant’s account number. To get the app, the merchants are required to visit the nearest branch of IDFC bank.

However, the app needs to be carried only by the merchants. Users just need to have an Aadhaar-linked bank account and mobile phone, credit or debit cards. Merchants can take payments online from customer’s bank account to their own account using the 12-digit unique Aadhaar number of the clients where clients can choose any of their bank accounts to do the transactions. Transactions can be made through Aadhaar-linked bank accounts (AEBA) only, said a Finiancial express report. Each transaction will be authenticated by the fingerprint of the customer. 

Security concerns: According to the Niti Aayog, the Aadhar Pay is a highly secure app which will use two main platforms – Aadhaar Payment Bridge (APB) and Aadhaar Enabled Payment System (AEPS). APB will act as repository between the banks and the customers to provide a smooth flow of transactions, while AEPS will help in authenticating the online process, further said the financial daily.

Customer benefits: Customers would not need mobile phone, internet connection, debit or credit card for payments through Aadhaar Pay. It would also not charge Merchant Discount Rate (MDR). MDR is the charge paid by the merchants to a bank merchant for accepting digital transactions through credit or debit cards.


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