New govt app to enable digital transactions through Aadhaar

MUMBAI: Soon, you will be able to do digital transactions using only your Aadhaar number.

You will just have to give your Aadhaar number to merchants or shopkeepers, put in your fingerprint, and the money will be automatically transferred from your account to theirs.

The government along with UIDAI, will next week launch the application, which seeks to use Aadhar numbers, fingerprints and a bank account for cashless transactions, according to people familiar with the matter.

The Unique Identification Authority of India (UIDAI) had suggested Aadhaar-Enabled Payment System (AEPS) for merchants and shopkeepers by using only the Aadhaar identification number and biometric authentication. Over 100 banks have AEPS, and majority of the accounts are linked to Aadhaar.

The UIDAI plans to roll-out the application in four to five districts of Andhra Pradesh at Public Distribution System shops through micro-ATM devices, and connect 2,500-3,000 merchants, said the people quoted above.

The maximum transaction permitted per account in a single day under AEPS is ₹50,000.

IDFC Bank has already launched such a prototype in Andhra Pradesh and Delhi. The government model is a replication of the bank’s app, with an underlying mechanism.

“The new Aadhaar cashless merchant solution simplifies payments for merchants as the settlement is done through Aadhaar, with customers using their fingerprint as the password and the merchant’s own mobile handset,” said Rajiv Lall, founder MD and CEO, IDFC Bank.

At present, merchants making transactions through a point of sale (PoS) machine are made to pay a merchant discount rate (MDR) of 0.75% on transactions up to ₹2,000, and 1% on transactions above ₹2,000.

Additionally, a PoS machine costs ₹8,000-12,000.

Any retailer with an Androidbased smartphone will be able to use the app.