Indian regulatory body to shut down “Pay to Aadhaar” system

The National Payments Corporation of India (NPCI) has instructed the country’s banks to discontinue Aadhaar-based payments using the Unified Payments Interface (UPI) and Immediate Payment System (IMPS) channels, The Financial Express reports.

The “Pay to Aadhaar” system allows payment recipients to accept a transfer by providing an Aadhaar number, which can be used to identify the recipient’s account through the NPCI. Alternatively, the beneficiary can enter bank details in the UPI, in which case the financial institution links the Aadhaar number with the appropriate account. The functionality is to be removed by August 31, and no information is provided about its possible future reactivation.

“Aadhaar number is a sensitive information and the revised framework about its usage in the payment landscape is still evolving,” the NPCI said in a circular to financial institutions. “With this background, we proposed removal of ‘Pay to Aadhaar’ functionality in both UPI and IMPS before the steering committee (meeting held on July 5, 2018). The proposal of removing the Aadhaar number functionality was approved by the steering committee.”
The steering committee is made up of 18 banks and payment companies, including the State Bank of India, Citibank, and One Mobikwik Systems.

The Aadhaar program has been plagued by delays, performance issues and rule changes. Uncertainty around the “framework,” meanwhile, hinges largely on a pending Supreme Court decision about the legality of the system and various components of it.

Article Topics

Aadhaar  |  banking  |  biometric payments  |  biometrics  |  Unified Payments Interface - UPI