Aadhaar Pay yet to find base in country

CHENNAI: Going beyond knowing your customer (KYC) application, have payments via Aadhaar taken off? According to recent figures, a majority of Indians are still using Aadhaar only for e-KYC verification and not day-to-day payments. Data from National Payments Corporation of India (NPCI) also shows that transaction gateways like Unified Payments Interface (UPI), which was launched a full year after Aadhaar Pay, are showing faster growth and are processing three times higher volumes and transactions.

As of July 2017, Aadhaar Enabled Payment System (AEPS) processed only 69 lakh transactions worth Rs 1,409 crore. In comparison, consumers used the Aadhaar platform five times more for e-KYC at 449 lakh transactions for the same month.

Banks say that in the evolution of India's payment journey, Aadhaar's focus has been strongly for financial inclusion. "In this journey, there has also been an array of other products like UPI, BHIM and Bharat QR Code. It does not mean they are competing products, but that they have been designed to address different customer needs. UPI, for instance is easily integrable with many of the bank's existing mobile apps. But Aadhaar relies more on the network of business correspondents and micro ATMs for last-mile payments," says Deepak Sharma, chief digital officer, Kotak Mahindra Bank.

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Another important factor that might be influencing adoption patterns is the nature of the services. "UPI and BHIM transactions are mostly person-to-person or person-to-merchant. For Aadhaar payments via microATMs, it is as, on date, an assisted service - customers have to rely on bank personnel or a business correspondent for these biometric transactions," says Sharma. In future, Aadhaar Pay is also expected to work as a viable alternative for point-of-sale (PoS) retail payments for customers who face difficulties using cards or smartphones. P.N Vasudevan, founder, Equitas Small Finance, which is focused on low and middle income households, says, "Nearly 80% of our KYCs are being filed online when Aadhaar number is provided, as Aadhaar eliminates any need for more documentation or verification. But the way forward is payments using biometric authentication.