Aadhar in the Spotlight: Uses, Benefits & Concerns


My social media news feed greeted me this morning with an article flagging the Aadhar as a dark concept right out of an espionage movie. Most of the negative sentiments to Aadhar seems to come from affiliating it with a political agenda; and that is the worst thing to befall a piece of technology.

Aadhar is a newfangled concept in the Indian eco-sphere and as such could revolutionize the Unique ID predicament much like how e-mail revolutionized communication in academe. But, the fact remains, that Indian internet regulations and laws around individual privacy and security are nascent if not under-defined. Which is why it becomes important to understand the concept of Aadhar from a neutral perspective, devoid of all the clutter that it is presently enshrouded in.

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Aadhar-Pay : The Facelift to Digital Payments


Post the demonetization move in November 2016, the impetus to going digital has been tremendous. Many payments solutions dived right in to get a bite of the ensuing predicament, none however has been more promising than Unified Payments Interface (UPI) introduced by the National Payments Council for India (NPCI).

Our collective trust as a nation, still happens to lie with the banking infrastructure. As opposed to online wallets, UPI offers a transaction solution from within the banking framework. The payment solution is simple, quick and easy to adopt, with the primary focus being on low value transactions. Aadhar pay is a parallel merchant-focused solution to the UPI and when implemented will come with added security features.

What is Aadhar Pay?


A cashless, cardless and device-less payment option which leverages the Aadhar database and uses your thumb impression for payment authentication. While UPI is a peer-to-peer solution that requires a mobile device to initiate cash transfer, Aadhar-Pay will not require any such devices.

Key Features

  • Service aimed at merchants, enabling them to receive payment from customers without any physical payment devices.
  • Based on the Aadhar platform which can be linked to your bank account in order to enable transactions.
  • Does not require a card, mobile phone or other payment instruments.
  • Real-time Bank-to-bank money transfer for those without a phone or other payment instruments

How Does it Work?

The process is simple as it is robust, ensuring a seamless and secure experience for merchant and customer alike. To transact, a customer would need to have their Aadhar number linked to their bank account. A payment would only require the bank name and the customer’s Aadhar number. The customer can then scan his fingerprint using the bio-metric device used by the merchant to authenticate and approve the transaction.

Steps Involved:

  1. Linked Aadhar to Bank account
  2. Enter Bank name and Aadhar number while making payments
  3. Use fingerprint as authentication to complete the transaction.
  4. Quick, seamless and secure mode of transaction.

What is The Aim?

Aadhar pay and UPI have been introduced to enable cashless and small value transactions to enable merchants and the ordinary citizen progress onto the digital platform. If implemented successfully this can bring about transparency and progress to the payments landscape in India, thrusting it forward among the advanced economies of the world.

We have taken a frog-leap in banking technology and jumped straight to cash-less banking Click To Tweet

By integrating Aadhar and bank account, the level of security is increased manifold and gives the customer more control over his finances. By not having to carry any payment instruments along, chances of theft and fraud are reduced while making the transaction highly efficient and quick.

What is The Real Challenge?


source: Livemint

The real challenge to this would lie in its successful adoption. So far only IDFC Bank has deployed it’s Aadhar based solution. There is no real impetus for financial institutions to engage and invest in this as much of the economy still leans towards a cash intensive approach.

The demonetization move may have pushed the economy to try out digital payment alternatives, but it’s going to take a lot more to ensure we continue down this path.