Aadhaar payment: Forget debit and credit cards, now pay bills with your thumb

The government launched on Tuesday an Aadhaar card-linked payments system that will allow customers to ditch their debit and credit cards and pay using fingerprints.

Aadhaar Pay, a new Android-based smartphone app, will also eliminate the fee charged by private card companies such as MasterCard and Visa. The app is available on Google Play Store.

Merchants must download the app on smartphones connected to a biometric reader. A customer has to enter her Aadhaar number in the app and select a bank for payment. Biometric scans are used as passwords.

This is the government’s latest move to encourage people to go cashless. The app was first announced by finance minister Arun Jaitley in his budget speech in February. The government targets 25 billion digital transactions on various new payments platforms in 2017-18.

The government issued one billion Aadhaar cards till April 2016, the latest year for which data is available. At least 400 million of these are linked to bank accounts, and the government hopes to link the rest by the end of this month.

Aadhaar Pay has been developed by IDFC Bank in collaboration with several government organisations, including the agency that controls Aadhar cards.

The bank hopes to enrol up to 75,000 merchants over the next two years, said its founder and CEO Rajiv Lall.

“Basic banking services will come to those who do not have even basic mobile phones,” he said.

The State Bank of India and Punjab National Bank will launch their merchant platforms for Aadhaar Pay in the coming weeks.

The app has some limitations, though.

It works only where there is internet connection, unlike debit or credit card machines which can work on telephone lines. Plus, the app can’t be used to transfer funds or get immediate information on refunds.