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Narendra Modi’s Aadhaar Payment App : Is it really useful ?

IDFC Bank in association with the government, recently launched the Aadhar Payment App, which is a new Android smartphone application that has been specifically designed to encourage the use of digital payments. The usage of this Aadhar Pay smartphone payment app also gives you a pellucid advantage over other plastic modes of payment : you will levied off the fee, that’s charged by the private card companies such as “MasterCard” and “Visa”. The Android application was launched yesterday, which was, 26th December 2016.

The new technology was shown to finance Minister Arun Jaitley and information and technology minister Ravi Shankar Prasad on December 19.

Mr. Jaitley had also made a perpetually positive comment on the same, stating : ” IDFC Aadhar Payment App will play a big role in making India a cashless economy, however it will take years, probably decades when one can say that India is a cashless economy. However, Cashless doesn’t mean ‘Without Cash’, rather it means ‘Less Cash’ ”

So, how exactly does this app function ? 

  1. The merchants have to mandatorily download the Aadhar Pay payment app on their android smartphone, which will be connected to a biometric reader. The merchants would also be required to connect their bank accounts and register themselves on the app.
  2. If a customer wants to make payment, then he/she is required to enter his Aadhar Number in the app and select the bank from which the payment is to be made and use the biometric scan as the confirmation of authenticity for the transaction.
  3. Upon entering the Aadhar Number, the app would automatically fetch the bank accounts linked with your Aadhar number, then the customer can make the selection of bank for payment as per his/her choice.
  4. Now, there is no requirement of any kind of password from the customer’s end, in order to pay the merchants against any purchases made. But, not everyone is eligible to use this facility. Only those customers with their bank account having a valid Aadhar number linked to it, would be eligible to make payments through Aadhar Pay Payment app.

Now, the question here remains : How beneficial it is for us,  especially at this point of time ? 

Currently, there are only 15 lakh POS ( Point of sale) machines deployed by the banks across the country. SBOs alone have deployed over 3 lakh terminals followed by HDFC Bank and ICICI Bank.

Is this count really a good one, especially at this point of time when the number of credit/debit card users are clearly outnumbering the POS machines available out there ?

Given below is an analysis of the Payments data for the cards in India :

Total number of Cards in India (Master + Visa + Rupay) 350 Million
Cards used for Online Transactions (10 -15%) 42 Million
Indian Population 1200 million
Average members per family 4
Total number of Families in India 300 Million
Debit cards per family 14%
ONLY approx 14% of the Indian Family are exposed to use their cards ONLINE in India! (Via)

14% . A mere 14% ! That’s a rough calculation of 600 machines available for 10 lakh consumers.
Now that’s a value that is not so pleasing to look at. But considering the nation’s growth from the digital aspect and the use of other alternative payment methods like Paytm, freecharge and various other wallet services, some more considerable number of people are well to cope with the prevailing situation. And with that being said, this new Initiative by the government is definitely going to ease up the situation.

Again, we are looking here at the urban population .

What about the rural count ?
The rural population in India, believes in something which can physically tested and adopted. The mindset of people with respect to payments and transaction has always been to transact with a physical entity, which is to see, touch and pay rather than click and pay! Now one fine morning, they are asked to pay with cards and do digital payments is something very hard to even imagine, forget about people doing it. 

Each bank charges fee for providing Debit cards against accounts and rural population doesn’t want to even shed a penny of their hard earned money over facilities that they would have not needed otherwise (if DeMonetisation would have not happened).

Moreover, Smartphone is a new piece of technology for the people in the rural society. Again, if we filter down the calculation, a roughly 400-500 million Smartphone users (along with 50 million plus Jio Subscribers) are able to use Internet over mobile phone. Now with this just 1/4th of the Indian population  that has internet while others may have not even seen how the Android phones behave over internet, 90% of whom will be from the rural areas. And expecting them to activate 4G or buy 4G enabled handsets (which still costs around a minimum of INR 5K in India) and then make them use an app to pay their bills sounds not only vague, but also looks like driving in the dark with the headlights switched off.

Now, the point here is not about the rightfulness and authenticity of the app when it comes to usage along with accessibility. Everyone knows that this is a general move by the government to try to get the whole nation a cashlessly transacting nation and also to make the entire population banked as well. But this looks like a part of the long term plan and will definitely take time to implement. The short overhauling of the aftermath of demonetzation for the rural population is still missing out from the Government’s side, and this is something that is very much necessary at this point of time.