Pay bills through Aadhaar-based app for free

The Centre is launching an Aadhaar-based app on Sunday to enable free retail digital transactions.

Consumers can get by without plastic cards, and merchants can do business even if they have no swiping machines. The app can be downloaded on Android phones, and used with the help of a biometric reader, which costs the merchant Rs 2,000.

A customer feeds his or her Aadhaar number into the app and selects a bank. The biometric information then serves as the password. The move is aimed at promoting digital payments among the poor and those living in areas not served by networks such as Master and Visa, an official said.

Master and Visa are popular with urban consumers, but have not made inroads in the hinterland. They charge about 2% on every transaction.

With this zero-charge initiative, the government hopes to promote digital transactions even in rural areas with limited or no banking presence.

Moreover, Master and Visa cards, used only by urban consumers, have not made inroads into the Indian markets as payment through them is charged a fee. These cards come with about 2% charge levied by merchants and an equal amount by card companies.

“The settlement is done through the Aadhaar bridge, which means it connects a much wider set of people. Anybody who has the Aadhaar seeding done can make payments to merchants with this app. It wouldn’t matter if the person does not have a credit or debit card, or even a mobile phone,” Rajiv Lall, MD and CEO at IDFC Bank, told reporters.

IDFC Bank has developed the app along with UIDAI and National Payments Corporation of India.

India currently has only 15 lakh POS terminals deployed by various banks. POS machines manufactured by two companies in China dominate the market.

To facilitate cashless payments, the government had earlier this week exempted POS machines from mandatory labelling by the Bureau of Indian Standards till March 31 to expedite their shipment.

The government has also earmarked Rs 100 crore to incentivise merchants to enrol themselves for the drive.