Users of Samsung Pay, BHIM and HDFC Bank’s mobile banking app can now make UPI payments to Aadhaar numbers. This suggests that some parts of the second version of the Unified Payments Interface (UPI) are live.

It was reported that the second version of the UPI was supposed to be out in March 2017 and the draft paper had detailed out that it would be using the Aadhaar to map out financial addresses on the UPI.

Samsung Pay’s latest update said that users can pay by using the Aadhaar number, while BHIM shows that user can also use Aadhaar to pay. HDFC Bank’s mobile banking app showed payment to Aadhaar as an option as well. Remember, when HDFC Bank launched UPI on its app in November 2016, the option to send money to an Aadhaar number was inactive.  Meanwhile, the option to send money to an Aadhaar number is not active on other UPI apps such as PhonePe and Chillr.

MediNama has written to the National Payments Corporation of India (NPCI) for more updates and we will update you once we hear from them.

A reminder: So far, there are three other payment infrastructures which are linked or will be liked to the Aadhaar:

– First is the Aadhaar-Enabled Payment System (AEPS) is a financial inclusion product developed by the NPCI which allows cash withdrawal, deposit and funds transfer at POS (Micro ATM) through a business correspondent of any bank using the Aadhaar authentication. So far, there are 119 banks on the AEPS. Most recently, Spice Money, the domestic remittance service from Spice Digital, got permission from the NPCI to process payments over the AEPS.

– Second is the Aadhaar Pay. The government launched the Aadhaar Pay in January. Customers can pay using their bank account linked with Aadhaar. To process payments, the customers will need to provide their Aadhaar number to the merchant and authorize payment through their fingerprint. The solution requires a biometric device to be linked to merchant’s mobile phone for payment authentication but customers do not need the phone at all.

– The third is the Aadhaar Payments Bridge System (APBS) which is responsible for direct benefit transfer of subsidies by the government. Subsidies will be transferred to bank accounts linked to Aadhaar.

It is worth noting that the number of failure rates in Aadhaar-based payments is huge. For example, in the AEPS, interbank transactions failure rates were found to be as high as 60% in the Watal Committee report on digital payments.

Crucial for bank account portability

It is worth noting that the integration of Aadhaar to UPI is crucial for bank account portability. Former Reserve Bank of India (RBI) deputy governor SS Mundra said that technology advances in the UPI and Aadhaar-bank account linkages will be necessary for bank account portability and a customer could move their bank account number, complete with credit and debit history, to another bank, if they are not satisfied with their services.  “The prospect of an aggrieved customer silently moving her account to another bank in the near future has become very real,” Mundra said.