In our move towards cashless economy, one of the key hindrances has been the unavailability of POS terminals as well as the fact that a majority of Indian phone users use feature phones. One way to overcome this issue has been the recently introduced of the ingenious Aadhar Pay app.
What is Aadhar Pay?
Aadhaar Pay is an Aadhaar-enabled payment app for merchants. This app allows merchants to accept cashless payments without using conventional POS payment methods. It eliminates the need for credit/debit cards and POS terminals which were the primary payment options used for making digital transactions. This mode of payment does not charge MDR (Merchant Discount Rate) to merchants, thereby being all the more attractive. Using the app, sellers can avoid incurring any extra transaction-related costs, such as MDR.
How does it work?
Merchants need to download the Aadhaar Pay app from the Google Playstore and register their bank account and other details as required. The merchant’s smartphone has to be synced with an Aadhaar biometric reader, which takes the place of the POS terminal. Once the registration process is complete, customers can start transacting by feeding their Aadhaar number and selecting their respective bank. Biometric scan will work as a password for completion of the 2-step transaction authentication. However, Aadhaar-enabled transactions can be made only when customers link their Aadhaar number to their bank accounts.
Aadhaar Pay would further boost the country’s transition to a digital economy as it can be used even by customers who do not have mobile phones or credit/debit cards. As the payment settlements are done through the Aadhaar platform, this payment solution is expected to be less complex and more cost-effective as compared to traditional POS payment solutions. This app would specifically benefit smaller merchants who are seeking viable alternatives to cash as no MDR fees will be levied on these cashless transactions. In fact till date, POS terminal penetration has been slow in India as an additional charge of 2% or 3% is levied on transactions made by credit or debit cards, which eats into the profits of small businesses. Additionally, POS machines also feature a range of fees in the form of rentals, etc. which would be completely eliminated by Aadhaar pay app.
Smartphone specifications for Aadhar Pay
- App can only be installed in Android version 4.2.2 or higher.
- Android smartphone used should be capable of detecting and supporting micro USB Biometric Fingerprint Scanner.
- Rooted devices are not recommended for use, i.e. the phone used by the merchant should not have customised OS.