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UIDAI wants three rupees from private players for every Aadhaar e-KYC

The UIDAI has also proposed to introduce a payment deadline while clarifying that there is no charge for government bodies.

The Unique Identification Authority of India (UIDAI) will charge private players Rs. 3 including taxes for successful authentication of users through Aadhaar e-KYC, according to draft regulations released on September 15, 2021. Each yes/no authentication request sent to UIDAI will also cost companies Rs. 0.50 per transaction.

All government bodies will be exempt from such charges, according to the proposed rules. UIDAI is accepting suggestions on the draft pricing structure till October 6.

This month, the government also allowed telecom companies to issue new SIM cards using Aadhaar e-KYC. As UIDAI drafts new Aadhaar e-KYC pricing for private players, the legality of such use-cases remains disputed after the Supreme Court explicitly disallowed private access to Aadhaar in 2018.

What do UIDAI’s Draft Aadhaar e-KYC Pricing Rules propose?

  • Prices for private players: The Rs. 3 price for Aadhaar based e-KYC transactions will supersede the Re. 1 charge suggested earlier. For yes/no authentication services, UIDAI proposes a charge of Rs. 0.50, even in cases of transaction failure.
  • No charges for government bodies: Authentications done by state and central governments for the transfer of benefits and services will be exempt from all charges.
  • License fee: The license fee to conduct Aadhaar authentications, as well as financial disincentives, will be charged separately from authentication charges.
  • Deadline for payment: Private players will be required to clear dues within 15 days of invoice, failing which the UIDAI will charge an interest of 1.5% per month on the due amount.
  • Transaction error code charges: The proposed authentication charges do not include providing details on transaction error codes. Such charges will be issued separately.
  • Price revision every two years: The price for authentication will be revised every two years. UIDAI has proposed linking the price to RBI’s Consumer Price Index, which is used to track inflation. The effective price after adjusting for inflation will be rounded to the nearest 10 paise.

Why did the Supreme Court disallow corporates to use Aadhaar based e-KYC?

In 2018, a Supreme Court bench led by Chief Justice Dipak Misra read down Section 57 of the Aadhaar Act which allowed private players to use Aadhaar for authentication. In the majority judgement authored by Justice A.K. Sikri, the Supreme Court said:

Even if we presume that legislature did not intend so, the impact of the aforesaid features would be to enable commercial exploitation of an individual biometric and demographic information by the private entities. Thus, this part of the provision which enables body corporate and individuals also to seek authentication, that too on the basis of a contract between the individual and such body corporate or person, would impinge upon the right to privacy of such individuals. This part of the section, thus, is declared unconstitutional.” – Page 560, Majority Judgement by Justice A.K Sikri (emphasis added)

Read: Government allows Aadhaar e-KYC for telecoms despite Supreme Court judgement striking down section 57 of Aadhaar Act 2016

On what basis did the government re-introduce private access to Aadhaar?

The Centre introduced the Aadhaar and Other Laws (Amendment) Ordinance, 2019 on February 28, 2019. The ordinance allowed private players to use Aadhaar for verification, but only if UIDAI is satisfied that such entities are:

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  1. compliant with certain standards of privacy and security, or
  2. permitted by law, or
  3. seeking authentication for a purpose specified by the central government in the interest of the State

UIDAI’s latest draft on pricing for private players to use Aadhaar-based e-KYC builds on this amendment. Its validity, however, has been challenged by petitioners in the Supreme Court, who argue that the amendment violates the Court’s 2018 judgement, The Leaflet reported.

e-KYC for private players: A timeline of events

  • 2016 – Aadhaar Act: The Aadhaar Act allowed corporates to verify the identity of individuals using their Aadhaar number.
  • 2018 – Supreme Court Judgement: The Supreme Court struck down Section 57 of the Aadhaar Act, declaring private companies’ ability to verify identity using Aadhaar as unconstitutional.
  • 2019 – New Aadhaar Ordinance: The central government reintroduced private access to Aadhaar in 2019 with the Aadhaar and Other Laws (Amendment) Ordinance, 2019.
  • 2021 – Telecom Reforms: The Department of Telecommunications allows private companies to use Aadhaar for KYC on the basis of the 2019 amendments to the Aadhaar Act.
  • 2021 – UIDAI’s New Pricing: UIDAI releases new draft prices for private players to authenticate users through Aadhaar e-KYC.

Also read: 

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