12
vritti
Technically Speaking
May 2017
[1]
As of March 2017, 113 crore Indians , which
represents about 99% of the Indian population
have been enrolled under the Aadhaar initiative.
Alongside this, bank accounts of people have
been linked to their Aadhaar accounts under
the Pradhan Mantri Jan Dhan Yojana (PMJDY).
The next logical step that has been thought of
by the Indian government is to enable payments
using the Aadhaar number. This will directly
cater to about 40 crore bank account customers
linked to with Aadhaar.
The idea here is to make India a cashless
economy and at the same time provide related
benefits of curbing black money, corruption and
fake currency. Also, the government will also
save upon is the cost of creation, maintenance
and replacement of cash which amounts to
[2]
21000 crore a year. But the main issue that
comes in this process of digital payments is of
digital connectivity.
[3]
As on 30th September 2016, 61.98% of urban
India was internet enabled, leaving 13.65% of
rural India without any connectivity. Moreover,
what is also seen is that the people in rural India
rarely own a smartphone. Then, how can India,
a country where 67% [4] of the population still
resides in rural areas, transacts digitally and
become a cashless economy?
It definitely was a great challenge in front of
Indian Prime Minister when he announced his
vision for digital India a few months back. But by
taking a leap of faith and tremendous amount of
planning, he communicated the same to 134
crore Indian population. He made payments in
India take a revolutionary turn, especially after
the recent demonetisation announcement.
The cornerstone is Aadhaar based payments
system (AEPS) - A bank led model which allows
online interoperable financial inclusion
transaction at PoS (MicroATM) through the business
correspondent of any bank using Aadhaar
authentication. It allows the customer to make
purchases using their Aadhaar number linked with
their bank account. The transaction just require
customer’s fingerprint for authentication.
Enrolment for a merchant would be done by
either a bank or will be done on apps such as
BHIM- Aadhaar Pay. For self-enrolment, the
merchant will have to first download the app on
their Android or iOS smartphone, and thereafter
link their bank account using their Aadhaar
number with the app. Or the merchant could
call up the bank for the app. The bank would
send the link to the app after checking the
credentials of the applicant.
Once this is done, the merchant will need the
customer’s Aadhaar number and a fingerprint
biometric reader for completing the payment.
All a customer will now have to do is to tell the
merchant his Aadhaar number and then place
his/her finger on a biometric scanner to make
digital payments for the purchase of goods and
services.
The process explained above is as simple as it
reads. Make payments without remembering any
username/password, or any pin. The customer
need not even carry a physical card to make
card payments or have a mobile with him to
make wallet payments.
However, the biggest challenge that we see in
the market today is the limited access to data,
especially in rural India. Hence, there is a need
for merchant app integrated with a USSD
backbone. In this case, the entire customer
interaction would still be on the mobile
application. However, instead of pushing the
payment information to the backend over the
data channel, the USSD channel will be used
for delivering the payload to the server. This
would help to support payments through AEPS
and NUUP infrastructure without the need for a
data connection making digital payments a
way of life in rural India.
But, with ease of use and simplicity also comes
the risk of security of the information that
resides in the UIDAI database. One of the
major ethical concerns is what happens if the
data gets into the wrong hands. How can it
possibly be mishandled is yet to be seen. But
considering the amount of thought and design