PM Narendra Modi launches BHIM-Aadhaar Pay app

Prime Minister Narendra Modi launched BHIM-Aadhaar platform - a biometric-based payment system - in Nagpur.

Background:

• The acceptability of digital payments has also been very poor among the merchants in the country. One of the biggest reasons behind this is India being cash dominated country and 2%-3% charges taken by the card companies such as Visa and master card.
• The lack of connectivity has also made it difficult for the merchants in the country to adopt digital payment systems. There are about 5 Crore merchants in the country at present and only 15 lakh POS machines for a population of more than 125 crore.

What is BHIM Aadhar app?

BHIM Aadhar is a new Aadhar Payment App is a new Android smartphone application being launched by the Narendra Modi government to encourage the use of digital payments.

• BHIM-Aadhaar Pay app will allow users to make payments through the fingerprint scanner, by authenticating the biometric details of a user with Aadhaar database.

Who should install Aadhar Pay app?

Aadhar Pay App is need to be installed by merchants only i.e. Only the shopkeepers, showrooms need to install aadhar pay app and the users who wants to pay using aadhar pay only need to link their aadhar number with their bank accounts. Shopkeepers/ Merchant can download aadhar pay to take payments from customers from their aadhar linked bank accounts using their biometric scan.

How it works?

Merchants would be required to download the BHIM Aadhar Pay payment app on their android smartphone connected to a biometric reader. The biometric reader is currently available for just Rs 2000. If a customer wants to make payment, then he/she just need to enter his Aadhar Number in the app and select the bank from which the payment is to be made and use the biometric scan as the password for the transaction.

• Upon entering the Aadhar Number, the app would automatically fetch the bank accounts linked with your Aadhar number, then the customer can make the selection of bank for payment as per his/her choice.

Advantages:

• The Aadhar Pay App for merchants would help eliminate the long waiting period and hassle of getting a new POS (Point of Sale) machine. At present there are only 15 lakh POS machines deployed by the banks across the country. SBI alone has deployed over 3 lakh terminals followed by HDFC Bank and ICICI Bank.
• Customers don't need to have an android phone or any other technology to make payments.
• No service tax or any other extra charge on the payments using Aadhaar payments app.
• There is no need to carry debit card or credit card.
• No need to remember pins, mpins and passwords.
• Instant Payments through aadhaar bridge system this is similar to Aadhaar Enabled Payment system (AEPS).
• Affordable payment solution for merchants as well as customers.