Will Aadhar Based Mobile Payments Take Off In India?

Siddharth Arora
Siddharth is the CEO & Co-Founder of ePaisa.

There are some things money can’t buy, for everything else uses your fingerprints!

Nothing can be more secure than using your fingerprint as your password. Your fingerprint can buy you a kg of tomatoes, a new phone or even a laptop. Simply put, fingerprints authentication through the National Payments Corporation of India (NPCI), using Aadhar will be the latest game changer to hit the market.

Like Apple Pay, all one needs is a fingerprint to buy a product or service. We believe that there is no greater fingerprint database than Aadhar. And the RBI’s vision offers us the opportunity to use Aadhar as the second factor authentication, instead of a pin or a signature.

The idea is to create a seamless, cardless, more secure online commerce that is more secure than swiping your card or remembering silly passwords. Biometrics is crucial to this scheme, and a key factor in developing a trusted m-commerce ecosystem.

Aadhar & mobile payment scenario in India

Aadhar was a project started by the Planning Commission in August 2010 and is the largest biometric project in the world that cuts across all segments of the society. As of now there are 67.38 Cr. Aadhaar cards that have been generated by the UIDAI. Aadhar is based on biometric and demographic data that is unique to each citizen. This data is collected by leveraging biometric devices and compatible software.

In November last year the RBI had directed all card swipe machines at PoS to be fitted with biometric scanners to enable the Aadhaar authentication in order to ensure security in card-based payment transactions. The directive was later scrapped due to high infrastructure and maintenance costs.  But again this year with the new government reviving the Aadhar card registration process, we hope to see it making a comeback in the mobile payment sector.

With biometrics authentication at the point of sale, everyone gets to make payments via their smarthpones or directly on a card reader like ePaisa™, by just scanning their fingerprints.

In their Payment System Vision document for 2012-2015, the Reserve Bank of India (RBI) states that “electronic payment systems for ushering in a less-cash society in India as the overarching objective.” In

the course of actions to implement this the apex bank will ‘examine the feasibility of using Aadhaar as authentication tool for all payment transactions’ and encourage further use of mobile banking and mobile PoS.

The RBI earlier this year tested a mobile-based payment system linked to Aadhar. Payments through this channel were to skip the traditional banking method. Telecom operators like Airtel and Vodafone were a part of this project with their pre-paid wallets linked to Aadhar. These initiatives by the Apex bank set the grounds for the introduction of biometric technology in the m-payment space in the country. The card has already been linked to passports, to procure mobile SIMs, PF accounts and the Digital India project which is Prime Minister Narendra Modi’s ambitious e-governance initiative.

The role of biometrics is likely to be crucial in the future of m-payments. Combining biometrics with other safety procedures makes the card payment more secure and that will go a long way in convincing the customer about the authenticity of mobile payment security. As biometrics technologies mature, consumer perceptions, experience and acceptance will decide the integration of this technology for securing online payments.

Biometrics- the way to go

The reason we support the Aadhar based verifications for online transaction is because of biometrics. It is definitely the way to go in the future to ensure safety in card transactions. They offer a high level of authentication and eliminate the need to have different passwords. In the world of digital payments, biometrics when coupled with digital wallets would mean that no card transaction takes place. Usually, the points of sale systems are vulnerable to hackers lifting data off them, but with biometric transactions this would be impossible.

The world over, biometrics are being used to secure mobile based payments. Apple introduced the fingerprint password in its Apple Pay, where checking out requires users to touch their finger to the iPhone’s fingerprint sensor to approve the transaction. As biometrics technologies mature, consumer perceptions, experience and acceptance will decide the integration of this technology for securing online payments.

Recently, Mastercard has also revealed its plans to use biometric authentication to replace passwords for online payments. The current online security authentication also called the 3D authentication will give way to biometric technology such as fingerprint, voice and facial recognition to avoid the need for consumers to remember passwords.

Where we come in

ePaisa™, India’s first multilingual mobile point of sale (POS)  offers merchants the future of payments, offering an all in one solution covering their payments, billing, loyalty and marketing needs. ePaisa™  also offers heightened security and protection against card skimming and has a PCI DSS complaint solution. ePaisa™ will introduce a biometric and NFC compliant card reader, in addition to our existing solutions for processing card present transactions. ePaisa™ provides round the clock support and training sessions to the users for any technical difficulty or bugs.

The future of payments is definitely digital. Enabling seamless, cardless commerce and doing it in a more secure environment than the existing system of magnetic strips and password based authentication is what will define the online payment prospects. Biometrics, NFC are the technologies to look out for in establishing a trusting and secure mobile payment eco-system resulting in more bills and receipts and less transaction failures.