IDFC Bank becomes first to launch biometric Aadhaar Pay system

IDFC Bank on Tuesday launched IDFC Aadhaar Pay, India's first Aadhaar-linked cashless merchant solution, following successful pilot launches across 16 states for a three-month period, involving over 1,500 merchants in digital transactions for customers of all banks.

Customers without a phone, or having an ordinary feature phone in cities as well as the interiors, made cashless payments using their fingerprint as a digital identity, IDFC Bank stated in a release.

Amitabh Kant, CEO, NITI Aayog and Aruna Sundararajan, secretary, ministry of electronics and IT, launched the Aadhaar-linked inter-operable banking software application in the presence of senior government officials in New Delhi.

The application has been developed by IDFC Bank under the guidance of the ministry of IT, NITI Aayog, Unique Identification Authority of India (UIDAI) and National Payments Corporation of India (NPCI).

''IDFC Aadhaar Pay proves that technology can revolutionise last mile payments. By using the fingerprint as digital identity, it empowers even individuals without a phone to pay electronically for small value transactions. The convenience of Aadhaar Pay is expected to encourage a behavioural shift towards digital payments,'' Rajiv Lall, founder MD and CEO, IDFC Bank, said.

The bank is targeting 50,000 – 75,000 merchant establishments in the next two years. These will be IDFC Bank's extended points-of-presence.

Mobile payments are fundamental to the spread of cashless payments in the country. As IDFC Aadhaar Pay rides on the JAM trinity (Jan Dhan-Aadhaar-Mobile), it is set to be a game changer in the financial ecosystem. It effectively does away with barriers to digital transacting, ie, it can be used by individuals without a phone, debit card, password or signature.

IDFC Aadhaar Pay first went live at a fair price shop in Andhra Pradesh in December 2016, and was subsequently introduced to merchants in Delhi and Bihar.

IDFC Aadhaar Pay app is made available on a merchant's smartphone. Customers can pay the merchant by selecting the bank's name and filling only one field on the merchant's phone – the Aadhaar number. The customer's fingerprint is the password used to authenticate the transaction.

Customers need not use debit or credit cards, download mobile applications or even carry a mobile to make cashless transactions. The solution eliminates the hassles of remembering passwords, account numbers, or setting up of virtual payment addresses and using USSD codes to transfer money.

A merchant is on-boarded with IDFC Bank using e-KYC, within a short time span of an hour. An SMS link enables the merchant to download the IDFC Aadhaar Pay app on any basic smartphone. This phone is connected to a STQC certified Aadhaar biometric reader.

The merchant benefits from the medium – as this being a new AEPS payment railroad, it has no merchant discount rate (MDR) attached to it and can provide the service to customers without having to pay the bank a transaction fee.

In rural and semi-urban areas, where customers need 'assisted digital' banking formats, IDFC Bank's Aadhaar Merchant solution is a perfect fit.

IDFC Bank currently has over 7,000 points of presence, spread across 19 states, serving 40,000 villages across the country. These points of presence include 76 branches, 1,782 microATMs and over 3000 e-PDS outlets. Starting with no retail customers, the bank has, within a year and a half, acquired an active customer base of 1.4 million.

IDFC Bank has been leading on the financial inclusion front by using technology for banking the unbanked. Its interoperable Aadhaar-based microATMs placed at kirana stores, chemists, dhabas, mandis, panchayat offices and other customer touch points, has cut the time and distance taken to access a bank's branch or an ATM.

This initiative has significantly enhanced convenience to citizens in deep rural and semi-urban locations across the country.