Will “BHIM-Aadhaar Pay” kill “Cards and Wallets” and help Unseat “Cash” in our daily lives?

Sustainable Agriculture, MSME & Green Value Chain Finance | Priority Sector Finance | Manoj Rawat, ValueFin India

Will “BHIM-Aadhaar Pay” kill “Cards and Wallets” and help Unseat “Cash” in our daily lives?

Will “BHIM-Aadhaar Pay” kill “Cards and Wallets” & help Unseat “Cash” in our daily lives?
Today PM launched “BHIM-Aadhaar” Pay app, a biometric-based payment system will enable making payments merely with the help of finger prints impression.
Interestingly the PM in his address indicated that the day is not far when “premises-less” banking will become reality and “mobile will become ATMs”.  The enabling part of BHIM-Aadhaar payment system is that it can make digital payments easy even for people “who cannot read or write”.  It is being envisaged that it will reduce the dependence on credit or debit cards and overall cash transactions.
 Is this move a major push to “unseat” cash addiction from the daily lives of we people?
Aadhaar may be game-changer app for Rural India
So far all digital payments have been dependent on credit or debit cards and mobile phones but Aadhaar Pay won’t require a card or even a mobile phone. Even if user cannot read or write, he can use it. Low smart mobile-phone penetration and digital literacy are considered big obstacles in the Governments plan to involve the masses in the digital payments system and less cash economy. Aadhaar Pay seems to address these obstacles. 
Is BHIM-Aadhaar formidable combination will lead to the quantum leap towards cashless society?
Following are the key 10 points on the newly Launched BHIM-Asdhaar Pay App:
1.      What actually is the BHIM-Aadhaar Pay app?
BHIM-Aadhaar Pay app is the merchant variant of the BHIM App that allows for making digital payments by using the Aadhaar platform.
2.      Who will get benefitted?
The customers will not need debit cards, credit cards, mobile, mobile wallets and internet connection. The App would also eliminate the fee currently being charged by the Private companies such as MasterCard and Visa. The enabling part of BHIM-Aadhaar payment system is that it can make digital payments easy even for people “who cannot read or write”.  In order to make payment, the customer will only have to give fingerprint.
3.      Who can make payment through BHIM-Aadhaar Pay app?
All Indians can pay digitally using their biometric data like their thumb imprint on a merchants’ biometric enabled device which could be Smartphone having a biometric reader.
4.      How will Aadhaar Pay App will be used ? Is biometric scan machine required?
Merchants need to download the app and have to connect their Smartphone to the “biometric scan” machine to accept the payments from customers. The merchants would also be required to connect their bank accounts with Aadhaar and register themselves on the App.
5.      How to make payment through BHIM-Aadhaar Pay app?
Merchants can take payments online from customer’s bank account to their own account using the 12-digit unique Aadhaar number of the clients where clients can choose any of their bank accounts to do the transactions. In order to make payment, the customer will only have to authenticate through fingerprint..
6.      What will be additional charge for BHIM-Aadhaar Pay app for customers?
Aadhaar Pay would not charge Merchant Discount Rate (MDR). MDR is the charge levied on debit cards transaction. It is paid by the merchants to a bank merchant and usually the merchants pass on the charges to the customers. The customers would therefore benefitted from this as the MDR would not be charged.
7.      What is the requirement for BHIM-Aadhaar Pay app?
Customers do not need a debit card or credit card for payments through Aadhaar Pay. The pay app also does not require any internet connection. However transactions can be made through Aadhaar-linked bank accounts (AEBA) only. The merchant will need Smartphone and biometric scan machine.
8.      How is the BHIM-Aadhaar Pay app supported?
Almost all major banks are now on board with large merchant base so that they can start accepting payments using BHIM Aadhaar
9.       How secure is this framework?
According to the Niti Aayog, the Aadhar Pay is a secure app which will use two main platforms – Aadhaar Payment Bridge (APB) and Aadhaar Enabled Payment System (AEPS). APB will act as repository between the banks and the customers to provide a smooth flow of transactions, while AEPS will help in authenticating the online process.
10.   BHIM versus Mobile Wallets? What is difference?
A mobile wallet is the digital equal of a physical wallet. You open this account with any mobile wallet service provider. You can load cash from your bank account into the mobile wallet. Cash is stored in your mobile wallet. You can pay for groceries, cab rides , petrol and diesel, movie tickets etc with your mobile wallet.
BHIM app is not a mobile wallet. It is an open platform which links directly to any bank account and is more useful and comprehensive than mobile wallets. BHIM is a digital payments solution app, for easy and quick transactions, based on the Unified Payments Interface (UPI) from the National Payments Corporation of India (NPCI). One can easily make direct bank-to-bank payments instantly, and collect money using just a mobile number or payment address. It allows person-to person money transfers, scheduled money collection, and transactions to be done through a Smartphone.
Only a fixed amount of money can stay in a wallet app, unlike BHIM. Wallets do not allow users to send or receive money from different mobile wallets; whereas there is no such restriction within the BHIM app. Currently wallets are primarily retaining customers giving cash backs, which may not be sustainable or may become uneconomical.
BHIM -Aadhaar Pay formidable combination is being seen as major push to revolutionise digital payments, including in rural India, Aadhaar Pay will be popularised through incentives for merchants and customers-cash back and referral bonus 
Yes, this move can give a major push to “unseat” cash addiction from the daily lives of people and propel the country towards “less cash society”.
Manoj Rawat | mkrawat@gmail.com
The views expressed are purely personal.

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