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UIDAI proposes payments regulator to prevent conflict of interest


The Unique Identification Authority of India (UIDAI), the the governing body for Aadhaar, is calling for a “payments system regulator” to prevent conflict of interest and ensure data security by monitoring digital payments, according to a report by International Business Times.

According to the agency, the payments system regulator will scale up Aadhaar-based transactions by encouraging interoperability and dissuading unauthorized uses of biometric data.

“In UIDAI’s opinion, there is a need for a payments system regulator/observer who can engage with all the system participants without having a conflict of interest in favour of a few participants, and who can work towards scaling up Aadhaar-based transactions,” the Ministry of Electronics & Information Technology (MeitY) told the finance standing committee of Parliament.

The Indian government told the committee, which is headed by Veerappa Moily, that the proposed regulator will have the authority and mandate to impose cost-based transaction fees for infrastructure providers and set rules and regulations that promote interoperability.

The payments system regulator will further reinforce the legal structure of Aadhaar, which is governed by an Act of Parliament, as well as monitor how UIDAI uses the data it collects.

The proposed regulator comes at a time when India is debating privacy and questioning the validity of linking various services to the Aadhaar number.

Many privacy experts, politicians and citizens are concerned that Aadhaar data could be used for reasons other than identity authentication, leading the UIDAI to propose a payment regulator for extra accountability.

UIDAI has also expressed concerns about the safety of digital transactions for a large portion of the population.

The governing body believes the proposed regulator should monitor and develop guidelines for digital payments.

“The government realises that currently a majority of citizens and merchants are using cash and paper-based modes (cheques and demand drafts) for payments and receipts,” MeitY said. “In order to inculcate ‘behavioural shift’ amongst people, there is aneed to create awareness and promote usage of digital payments.”

Last month, it was reported that current and past employees of the Unique Identification Authority of India (UIDAI) are launching private firms or funding start-ups that are selling Aadhaar-based services and products.

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