India to be a Safe and Secure Cashless Economy with Aadhaar Enabled Payments

Digital India move gets accelerated with demonetisation of high denomination notes and the Prime Minister announcing on his “Maan Ki Baat” radio broadcast that people should accept more of digital transaction or payment methods; the Government has also started programmes on creating awareness and education on digital economy in many rural areas. As the focus moves to India being transformed to a cashless economy, the government is gearing up to facilitate Aadhaar number-enabled financial transactions through mobile phones. Aadhaar-enabled transactions are card-less and pin-less. In Aadhaar enabled payment system bank account has to be linked with the Aadhaar card and thereafter cash can be withdrawn and funds can be transferred using the 12 digit Aadhaar number with biometric fingerprint/iris authentication. 

Aadhaar is being pushed as 40-50 crore people who do not have smart phone or any other means of electronic transaction. Aadhaar enabled payment system, will be the safest and most secured system and the best solution since all the people need is to give their biometrics to carry out any transaction and it doesn’t require them to remember their PINs or password, which can be an issue with the poor and the illiterate. The government is working on developing a common mobile phone app that can be used by shopkeepers and merchants for receiving Aadhaar enabled payments bypassing credit and debit cards, PIN or password.

To make the transition to a digital economy financial systems of the country have to be made Aadhaar-enabled and Aadhaar link have to be made even at the existing Point of Sale (PoS) level and at the internet banking level to formalise cashless banking in the country. The Unique Identification Authority of India has planned to increase biometric authentication capacity to 40 crore a day from 10 crore to encourage more use of platform for realising cashless society.

National Institution for Transforming India (NITI Aayog), a Government of India policy think-tank established by the Narendra Modi government to replace the Planning Commission, has already initiated the move. The mobile manufacturers have been asked if all the mobiles made in India should come with inbuilt iris or thumb identification system to help Aadhaar-enabled transactions. A system of incentives/disincentives is also being worked out so that cash transactions would become more expensive and people will choose to pay digitally.

The Government would be undertaking a major outreach communication campaign to ensure that every segment of the population is enabled to use one or any other mode of digital payment and has chalked out a plan to promote tools such as Unified Payment Interface (UPI) and digital wallet apps. The ultimate purpose of the government would be that it wants to put in place a proper system to continue digital transactions on a sustainable basis.