Average number of card transactions per inhabitant in India is only about 7, which one of the lowest in the world. In order to reform this scenario, the government is making efforts to implement Aadhar card based transaction by discussing with mobile manufacturers, merchants and banks. In order to support this initiative, biometric authentication capacity of Aadhar cards is being augmented from 10 crores to 40 crores per day. Currently, 1.08 crore population of India has been issued Aadhar card covering 99% adult population. Among other initiatives, government is working with mobile manufacturers for iris or thumb identification system integration with smartphones for enabling Aadhar based transactions smoothly.
Indian government launched Aadhaar Payment App in December 2016 as an initiative to drive cashless economy in the country. The app is seen as alternative to plastic cards and POS systems within India as the system does not require card or pin for transaction authentication. Card based payments have slower adoption rate in India due to 2% to 3% service charges imposed by merchants. Hence it is predicted that Aadhar based payment systems will revolutionize cashless transactions in a positive way and increase customer adoption in the long run.
The new payment application is compatible with Android platform. Retail merchants need to install a biometric reader along with the application which costs approximately INR 2,000. Cardholders need to enter corresponding Aadhar Card ID in payment app and perform biometric scan verification to validate a transaction. The application can be linked to any bank account and Aadhaar-Enabled Payment System (AEPS) for online transactions, fund transfer, balance enquiries and cash debits and credits. The government is providing incentives to merchants who have enrolled for the system through 200,000 common service centers. Total incentive budget set for this initiative is INR 100 crore (USD 15 Million).
The Indian mobile payment market is expected to record a CAGR of 108.4% from 2017-2021 to reach US$ 10,09,737 million in transaction value terms by 2021, increasing from US$ 53,521 million in 2017. In 2016, the market registered a growth rate of 133.7% over 2015, to reach US$ 19,844 million.
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