An Aadhaar biometric identity card, issued by the Unique Identification Authority of India (UIDAI). (Photographer: Dhiraj Singh/Bloomberg)

NPCI Asks Banks To Stop Aadhaar-Based Payments Via UPI, IMPS

The National Payments Corporation of India asked banks to discontinue Aadhaar-based payments through the real-time Unified Payments Interface and Immediate Payment System.

The umbrella body of India’s payment systems asked banks to remove the ‘Pay to Aadhaar’ functionality both as remitter and beneficiary from Aug. 31, according to a circular dated July 17 reviewed by BloombergQuint. All interfaces that currently offer this functionality, such as UPI and third-party apps, have been asked to remove the option.

“Aadhaar number is a sensitive information and the revised framework about its usage in the payment landscape is still evolving,” the circular said.

The Financial Express first reported on the development.

Also read: UIDAI Restricts Digital Wallets From Accessing Aadhaar Database

The decision was largely taken due to the ongoing implementation of the Virtual ID, that was introduced to give Aadhaar holder an option of not sharing the 12-digit number, and not because of any security concern, a person privy to the development told BloombergQuint. The removal of ‘Pay to Aadhaar’ won’t have much impact given the transactions are less then 0.1 percent of overall payments, the person said.

The proposal of removing the functionality was approved by a steering committee on July 5. It comprised 18 bank and non-bank payment players, including State Bank of India, HDFC Bank, ICICI Bank, Maharashtra Gramin Bank, One Mobikwik Systems and Paytm Payments Bank.

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