Aadhaar Enabled Payment System (AEPS): All the Information You Need to Know

Aadhaar Enabled Payment System (AEPS): All the Information You Need to Know

Using the Aadhaar infrastructure, the Aadhaar Enabled Payment System (AePS) is a safe and practical payment method that makes financial transactions possible. Through the use of their Aadhaar number and biometric authentication, people can access a range of financial services, such as fund transfers, cash withdrawals, balance inquiries, and more.

This page offers a thorough explanation of the Aadhaar Enabled Payment System, including its characteristics, advantages, applications, and function in advancing digital payments and financial inclusion in India.

What is AePS?

The National Payments Corporation of India created the AePS, or Aadhaar-enabled payment system. Users can utilize their Aadhaar number and biometric data to conduct transactions on a micro-ATM. The following are AePS's salient features:

• AePS allows Aadhar card holders to link their bank accounts to their Aadhaars, just like debit or credit cards, and conduct transactions using those accounts.

• Biometric authentication: Through the use of Aadhaar authentication, transactions are completed at Points of Sale (PoS) or micro ATMs by providing the Aadhaar number and biometric information (iris or fingerprint scan).

• Bank account privacy: By removing the need for users to divulge their bank account information during the transaction, security and privacy are improved.

• Fund transfers: AePS offers a practical means of sending and receiving money by enabling users to move money between bank accounts.

• Secure transactions: Because AePS transactions necessitate biometric authentication, which verifies the user's identity, they are regarded as safe and secure.

AePS makes financial transactions easier and more secure by utilizing the Aadhaar infrastructure. This makes it accessible to a larger group of people, especially those who might not have access to traditional banking services.

Aadhaar Enabled Payment System (AePS) Benefits

All societal segments can benefit from the following several advantages of the Aadhaar-enabled payment system (AePS):

• User-friendly: The ease of use and comprehension of AePS for a range of financial transactions is attributed to its design.

• Biometric authentication: To ensure safe and dependable transactions, the system requires the submission of biometric data (such as fingerprints or iris scans) and the Aadhaar card number for authentication.

• Empowering the underprivileged: By giving them access to banking services and facilitating digital financial transactions, AePS significantly contributes to the empowerment of the less fortunate segments of society.

• Bank account privacy: Users can transact without disclosing the specifics of their bank accounts, improving security and privacy.

• Convenient Bank Account Access: By utilizing Aadhaar authentication, AePS enables customers to conveniently access their bank accounts, doing away with the requirement for in-person bank visits.

• Enhanced security: AePS transactions are made extra safe and dependable by virtue of the submission of biometric information and the Aadhaar number.

• Reach into rural places: AePS makes it possible to install micro Point of Sale (PoS) devices in isolated towns and villages, giving consumers in underserved areas simple and convenient ways to do business.

AePS's features

The AePS facility demonstrates the following main features:

• Account deduction: To ensure a simple and easy transaction process, the transaction amount is taken straight out of the user's bank account linked to their Aadhaar.

• fundamental banking operations: Cash deposits, cash withdrawals, balance inquiries, mini bank statements, and interbank and intrabank fund transfers are just a few of the fundamental financial operations that Aadhaar card holders can carry out using AePS. Through a banking correspondent, these transactions can be carried out.

How Does AePS Operate?

All you need to do is remember your bank account's 12-digit Aadhaar number to have access to vital financial services. Your fingerprint needs to be verified with your Aadhaar in order to use the AePS (Aadhaar-enabled Payment System) feature or to confirm a transaction. The bank won't proceed with the transaction until your fingerprint has been verified by the Unique Identification Authority of India (UIDAI). 

Let us examine a hypothetical situation in which a person posing as Anvay displays an Aadhaar number linked to Anvay's identity. Anvay must present his fingerprint for authentication in order to finish a transaction and pay for his items from a merchant. The bank will process the transaction if the fingerprints match. As a result, a large number of organizations are engaged in enabling these kinds of transactions:

1. The person who wants to complete the transaction.

2. The party through whom the transaction is carried out as an intermediary, who could be a bank correspondent, a retailer, or another individual.

3. The bank that supports Aadhaar.

4. UIDAI, which is in charge of fingerprint verification.

5. The National Payments Corporation of India, or NPCI, is in charge of settling transactions.

How Is the AePs Facility Used?

An Aadhaar card bearer with a connected bank account can take the following actions to make use of the AePS facility:

1. Speak with a local banking representative.

2. Insert the Point of Sale (PoS) machine's Aadhaar number.

3. Name the bank and choose the transaction type.

4. To complete the transaction, enter the transaction amount.

5. To validate the payment, provide biometric authentication (iris or fingerprint scan).

6. A transaction receipt will be provided if the process is successful.

Note: In locations where the bank does not have a branch, a banking correspondent serves as an agent chosen by the bank to offer financial services.

What Does Using the AePs Facility Require?

To utilize the AePS facility, the following prerequisites must be met:

• The bank account should be connected to an Aadhaar card.

• Adhaar number

• The holder of the Aadhar card's fingerprint biometric

• Micro ATM

AePS Service Goals

The following are the goals of the AePS service:

• Access to bank accounts connected to Aadhaar: Permit clients to easily carry out banking operations using their Aadhaar-linked bank accounts, including cash deposits, withdrawals, money transfers, balance queries, and mini statements.

• Streamlining the distribution of funds: By immediately putting money into bank accounts connected to Aadhaar, you may streamline the transfer of funds for government programs like NREGA, Social Security pension, and others.

• Encouraging digital payments and financial inclusion: By making banking services easily accessible through Aadhaar verification, you may support government efforts to encourage digital payments and boost financial inclusion.

• Building a solid basis for Aadhaar-based banking services by utilizing Aadhaar as a distinct identity and verification system for dependable and safe transactions is essential to the establishment of Aadhaar-based banking.

Limit on AePS Cash Withdrawals

The NPCI has established a limit transaction amount of Rs. 10,000 for a single AePS financial transaction.

Limit on AePS Fund Transfer

AePS transactions are not subject to any limitations from the Reserve Bank of India (RBI). Nonetheless, a daily cap of Rs. 50,000 has been imposed by certain banks on the total amount of transactions.

Fees for Transactions Using AePS

The cost of AePS transactions is somewhat higher than that of UPI transactions. An AePS transaction may cost as much as Rs. 15 each time. The breakdown of the transaction cost is as follows:

• Although it hasn't done so yet, the UIDAI might in the future.

• A fee of up to 1% of the transaction may be assessed by the bank, with a minimum of Rs. 5 and a maximum of Rs. 15.

• The settlement cost that NPCI may charge is between 15 and 25 paise.

Currently, up to December 2019, the Union government will pay for all AePS payments, including debit card, UPI, and AePS MDR fees. As such, AePS transactions are free at the moment.

Services Provided by AePS for Banking

• Cash Deposit

• Cash Withdrawal

• Balance Enquiry

• Mini Statement

• Aadhaar to Aadhaar Fund Transfer

• Authentication

• BHIM Aadhaar Pay

Additional Services Provided by AePS

• eKYC

• Tokenization

• Aadhaar Seeding Status

Important Considerations for Using AePs

The following are important things to remember when utilizing the AePS facility:

• Aadhar linkage: Having a bank account connected to your Aadhaar number is necessary in order to use the AePS service. Before using AePS, make sure your bank account is correctly connected to Aadhaar.

• PIN or OTP: Depending on the bank's authentication procedure, you will need to supply either a Personal Identification Number (PIN) or a One-Time Password (OTP) in order to finish a transaction through AePS. Verify that you have the required OTP or PIN on hand for the transaction.

• Use of primary account: If your Aadhaar number is connected to more than one bank account, be aware that AePS transactions can only be made with the primary account linked to your Aadhaar. Make sure that when you transact, the principal account is chosen.

• Bank accounts linked to Aadhaar: Only these bank accounts are eligible for the AePS feature. In order to access and use AePS services, you must have an active bank account connected to your Aadhaar.