Prime Minister Narendra Modi today launched Aadhar Pay, a rebranded version of UPI (Unified Payment Interface) and USSD (Unstructured Supplementary Service Data).

The new app expected to minimise the role of plastic cards and the point of sale machines once believed to be essential for a less cash society.

The app would eliminate the fee payments for service providers like card companies such as Mastercard or Visa, which has been a stumbling block in merchants switching to digital payments making it affordable to even merchants in remote villages, said people familiar with the development. All that it needs is an Android phone with the merchant.

How does it work?

Merchants need to download the Aadhaar cashless merchant app on their smartphones connected to a biometric reader, which is currently available for Rs 2,000. The customer will then feed his or her Aadhar number into the app, select the bank through which the transaction will take place, and the biometric scan will work as a password for the transaction to be authenticated.

"This app can be used by a person to make payments without any phone,'' Unique Identification Authority of India (UIDAI) CEO .. Ajay Bhushan Pandey told ET. "Almost 40 crore Aadhaar numbers already stand linked to bank accounts - that is half the adults in India. The aim is to link all Aadhaar numbers with bank accounts by March, 2017."

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