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In today’s rapidly digitising economy, the Government of India (GoI) has taken significant strides to promote a cashless and inclusive financial ecosystem. One such initiative is BHIM Aadhaar Pay, an alternative to online and card-based payments, introduced to foster digital transactions across rural India—home to nearly 65% of the nation’s population.
Despite its potential, Aadhaar Pay remains underutilised in these regions. The primary barrier? A lack of awareness. Due to limited promotional efforts through print or broadcast media, both merchants and customers are unfamiliar with its benefits, resulting in low adoption.
Aadhaar Pay is a merchant-centric mobile application developed by the National Payments Corporation of India (NPCI). It enables merchants to receive instant payments directly into their bank accounts from customers holding Aadhaar-linked accounts with any bank.
Unlike traditional payment modes that require remembering PINs or passwords, Aadhaar Pay leverages biometric authentication (fingerprint or OTP), making it especially effective in areas with low literacy or limited access to smartphones.
Let’s take an example:
Rahul, a kirana store owner in a remote Indian village, is approached by Mohan, a regular customer who forgets his wallet during a purchase. Rahul introduces him to Aadhaar Pay—a solution Mohan had never heard of. Upon learning that he can make payments using just his Aadhaar number and fingerprint (without needing a debit card or smartphone), Mohan decides to try it.
Rahul logs in to the Aadhaar Pay app using his Aadhaar-linked credentials and enters the bill amount. Mohan inputs his Aadhaar number, selects his bank, and completes the transaction with a fingerprint scan. Both parties instantly receive confirmation on their phones.
This simple yet secure payment experience highlights how Aadhaar Pay can transform everyday transactions for customers and merchants in rural India.
Real-time fund transfers for merchants.
No MDR (Merchant Discount Rate) charged by banks.
Ideal for low-income or tech-inexperienced users.
Supports financial inclusion goals of the government.
As of now, over 96 crore bank accounts are linked with Aadhaar, including 75% of Jan Dhan Yojana accounts. Leading banks such as SBI, ICICI, Andhra Bank, Syndicate Bank, IndusInd Bank, and IDFC First Bank have already gone live with Aadhaar Pay.
1. Technical Hurdles
According to UIDAI, nearly 16 lakh Aadhaar authentications fail weekly, largely due to fingerprint capture issues and a high matching threshold (98%). However, this is improving with the rollout of advanced biometric readers and iris scan technology.
2. Administrative Roadblocks
Although Aadhaar-Pay only requires a linked bank account, the Supreme Court has ruled that Aadhaar-bank linking is not mandatory, affecting uniform adoption.
3. Security Concerns
Biometric authentication raises concerns about privacy and data protection. UIDAI has attempted to mitigate this by decoupling Aadhaar data from third-party apps, ensuring all authentication happens via secure APIs.
To further boost trust, formal certification and testing protocols for third-party Aadhaar Pay apps are essential. This will reinforce credibility and encourage broader use among both merchants and consumers.
Despite the challenges, the untapped potential of Aadhaar Pay is enormous. For a truly cashless India, Aadhaar Pay can serve as a powerful enabler—especially in underbanked and underserved areas.
To accelerate adoption, joint efforts from the government, financial institutions, and fintech innovators are needed. Awareness campaigns—across both digital and traditional channels—along with merchant incentives can drive mass adoption.
At CARD91, we understand the critical role Aadhaar Pay plays in India’s digital payment evolution. Our Infrastructure-as-a-Service (IaaS) platform empowers banks, NBFCs, and fintechs to seamlessly integrate Aadhaar Pay into their payment offerings. With our secure, scalable infrastructure, real-time transaction capabilities, and regulatory-compliant solutions, we help partners unlock new market segments—especially in rural India.
If you’re a bank, fintech, or merchant network aiming to tap into Aadhaar-enabled payments, CARD91 is your ideal technology partner to power innovation and trust at scale.
To know more about our offerings connect with our experts
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