Aadhaar Based Payments Will the Game Changer In Digital Banking

By | June 12, 2017

The Aadhar card has become one of the biggest changes to be adopted in making India a modern and developed nation. But what is the reason for such a change? Where has this idea emerged from? How will it help the citizens of the country? What benefit will it have?

Aadhaar card based payments

The Back Story:

After the Kargil War in 1999, the Indian Government realised that in order to protect the people residing in the border regions identity cards must be issued on a priority basis. A report was submitted to Mr. Atal Bihari Vajpayee, which stated that a “multi-purpose National Identity Card” should be started soon wherein priority must be given to the border villages and then the rest of the country.

After much debates in this regard, finally on 11th March 2016, the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 was passed by the Lok Sabha. The Aadhar is a 12 digit unique identity number and is the largest biometric ID system in the world. In 2017 more than 99% of Indians of 18 years and over have been enrolled under Aadhar.

Most important benefit:

The most important benefit is that Aadhar card will be the biggest game changer in the banking system. Let’s see what other benefits it will provide us with-

1. Once launched there will be no need for mobile banking or debit cards, with just the aadhar card number you will be able to access your account and make payments. This will be a major benefit as the idea of wallets and carrying around cards has started to become obsolete.

2. With the use of the aadhar card in banking system, citizens will not have to rush to the bank to pick up or deposit money anymore.

3. Local merchants will be able to accept aadhar based payments. This will not only benefit the people but will also benefit business owners as the Government will pay up to 1% of the transaction value to the merchant to ensure that no fraudulent actions take place.

4. Banks will no longer be required to avail the use of PoS machines, which are highly expensive and not always reliable. Merchants are required to pay huge amounts when swiping debit cards in these machines which eventually trickle down to the customers, but with the use of Aadhar cards these machines will now become obsolete.

5. The idea of mobile wallets has also emerged in the recent times wherein people can store money in apps like PayTM or Airtel Money. But even these wallets charge a high rate of interest for any transaction incurred.

With the linking of Aadhar Cards to the bank account these mobile wallets will have no use as now the person will be able to directly access their own account without having to store their money or transfer it into another one.

So, imagine a world where there is no need to carry heavy wallets with innumerable cards in them to access your money but just memorizing a 12 digit number to gain access to the world of banking right at your doorstep. 🙂

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