Aadhaar Payment App: What Is It And How It Works?
Aadhaar payment is one of the easiest and fastest methods of fund transfer. It has become a revolutionary method of money transfer because Aadhaar payment allows you to transfer funds with or without a phone. Yes, you heard it right! Let’s see in about the Aadhaar payment app here.
What Is Aadhaar Payment App?
There are lots of mobile payments app available in the android market like UPI apps, Paytm, mobile wallets and much more. But have you heard of the Aadhaar payment app? This is something different from all the above-said apps.
The best part about this app is that you don’t even require a mobile phone to transfer funds. Exciting, isn’t it?
Using this app, you can pay through AEPS which doesn’t require a phone. If you are the one who is going to send the money, then you don’t need to have a smartphone.
But the payment receiver has to arrange a smartphone (with this app installed) to receive the money. This app is solely made for the benefit of merchants and shopkeepers and to facilitate the cashless India scheme.
For better security, this app uses your fingerprints for authentication. And then based on your fingerprint, the money will be paid from the bank account that is linked with your Aadhaar ID.
Requirement For Aadhaar Payment App:
Here is the list of requirements for using this Aadhaar payment app.
- The Aadhaar payment app doesn’t require any physical gadgets or gazette from the customer.
- Rather it requires the fingerprint of the customer (for authentication) along with their Aadhaar number.
- Also, the customer needs to have an Aadhaar linked bank account.
For using Aadhaar payment app, the merchants need to have the following:
- The merchants or the shopkeepers need to have a smartphone with Aadhaar payment app installed for receiving the payment.
- They also need to have a reliable Internet connection.
- Most important of all, they need have a fingerprint scanner to scan the customer’s fingerprint.
- And finally, they should also have a bank account linked to the Aadhaar payment app.
Charges Of AEPS:
When compared to UPI transactions, AEPS is little costly. It can cost up to 15 INR per transaction.
When you transact money through AEPS, there are three institutions involved, and they might charge fees.
1. The authentication is carried out by UIDAI, and they may charge a nominal fee for authentication.
2. The NPCI, which is responsible for the transactions will charge ten paise for authentication and 25 paise as settlement charge.
3. If the merchant has an account with a bank other than the one linked with the Aadhaar number of the customer, then the bank may charge up to 1% of the transaction value. Here the value varies from 5 rupees to 15 rupees per transaction.
Benefits of Aadhaar Payment App
Next, let’s discuss the benefits of using Aadhaar payment app.
- The AEPS app eliminates the use of a smartphone. The payee doesn’t need to have a smartphone or any other technologies to make the payment.
- Another major advantage of using this app is that there is no extra service charge involved. Also, no tax will be collected for the payment transferred using Aadhaar payments app.
- You don’t have to carry your credit or debit card wherever you go.
- It replaces the use of MPINs and passwords with the fingerprint authentication. Hence, you don’t have to remember those anymore.
- Affordable payment solution for customers as well as merchants.
- You can perform a financial and non-financial transaction through the banking correspondent.
- A banking correspondent of any bank can do the Aadhaar payment transaction.
- You don’t need to use your signature or debit card.
- Aadhaar payment is fast and secure because no one can forge your fingerprint.
- Using micro POS, a banking corresponded can reach a distant and rural place for Aadhaar payments.
How Aadhar Payment App Works?
Till now, we have discussed the benefits of Aadhaar payment app. Let’s see how this app works.
1. If you are a shopkeeper or merchant, then you need to install Aadhar cashless merchant’s app from the android play store.
2. Then you need to connect a fingerprint scanner with your smartphone. You can connect it using a USB cable.
3. To make payment, the customers need to enter their Aadhaar number on the Aadhaar payment app installed on the merchant’s phone.
4. Once entered, the app will list all the bank accounts linked with that Aadhaar number. From this list, select a bank account from which you wish to send the money.
5. Next, you need to feed your fingerprint in the scanner. Your fingerprint here will act as a password for this transaction.
6. Now the fingerprint scanner will transfer your fingerprint data to the app since it is interconnected.
7. The app will validate your fingerprint data using the Aadhaar database. If it matches with the existing record, then the NPCI will get a message, and then it transfers the money to the merchant.
Limitations of Aadhaar Payment App:
1. Although the Aadhaar payment app serves as an easiest and fastest way of money transfer, the merchant needs to bear the extra cost for the fingerprint scanner.
2. Person to person money transfer is impossible with this type of app since it requires a fingerprint scanner.
3. This app requires a reliable internet connection to work. It is worthless in weak or no coverage area.
4. The transaction charges are relatively higher when compared to other payment modes.
Aadhaar Payment App Vs UPI Apps
The comparison of UPI apps and Aadhaar payments app doesn’t serve any purpose because both of these apps are used for instant money transfer.
Also, the app mechanism is also more or less the same for both of these apps. If you still want to know which one is better, then read below:
1. If you are going to do a person to person money transfer, then using UPI is highly advantageous since it doesn’t require a fingerprint scanner.
2. If the transaction is a customer to merchant transaction, then using Aadhaar payment app would be the better option since it doesn’t require any internet connection or smartphone from the customer’s end.
The Future of Aadhaar Payment App
To facilitate the cashless economy in India, everyone is urging us to credit/debit cards. But this turns out to be a massive failure since the transaction charges are higher for card payments. The merchants are charging an additional 2-3% for card payment, and the card companies like Visa or MasterCard are also charging an extra 2% per transaction.
To avoid these extra charges and for the betterment of cashless economy, the Aadhaar payment app has been launched by the government. With AEPS you can transfer the money instantly to the merchant without bearing higher transaction charges. Because of this, the Aadhaar payment app is being used by plenty of merchants all over India.
Recently, a government official has said that almost 50 crores of the Aadhaar numbers are already linked to their corresponding bank accounts, which is equal to half of the adults in India. The Government is aiming to link all the bank accounts with the individual’s corresponding Aadhar number by the end of 2017.
If the Aadhaar payment app becomes a success (it is not yet a huge success), India will see a boom towards this cashless economy.