Paynear, a digital payments company and a mobile point of sale (POS) terminal provider, will be running an Aadhaar Pay pilot in Hyderabad in June, CEO Priti Shah told MediaNama. The pilot will begin with 50 merchants in the city and Shah added that there were still a number of interconnection issues which needed to be fixed before they could roll it out on a bigger scale.

Currently, Paynear has around 40,000 merchants on its platform.

On Aadhaar Pay, customers can pay using their Aadhaar-linked bank accounts. To make a payment, the customers will need to provide their Aadhaar number to the merchant and authorize payment using their fingerprints. The merchant app will come with a biometric device, which will be linked to the merchant’s the mobile phone for payment authentication.

IDFC Bank was first off the mark to launch the new payments system in March and the bank launched it after a pilot in 16 states where they on-boarded over 1,500 merchants on their smartphones. At the time IDFC Bank said that it will not be charging merchants a merchant discount rate (MDR). The MDR is an interbank settlement fee a merchant has to pay banks.

However, Shah said that the MDR is still applicable for Aadhaar Pay but could not provide more details. Separately, in an earlier press conference in April, National Payments Corporation of India COO Dilip Asbe said that there would be an MDR for Aadhaar Pay as well but that the RBI and banks were deliberating on fixing the amount.

UPI transactions: Paynear also said that they have started Unified Payments Interface (UPI) transactions on their POS machines. Note that the NPCI, Axis Bank and Innoviti Payment Solutions launched a solution where customers can pay via the UPI on a POS terminal. When a customer requests UPI Payment mode, the cashier needs to select the option on the existing card POS terminal and inputs the relevant bill payment amount. A dynamic QR-code on the POS terminal screen is generated which can be scanned by any UPI apps.  When scanned, the QR code automatically transfers relevant transaction details and displays it on the customer’s payment app for authorizing payment transfer.

Paynear funding: The company raised pre-Series A funding worth $2.5 million from Mitesh Majithia back in December 2015. At the time the company said that it planned to raise $10 million for its Series A funding.