written by Khatabook | January 10, 2022

Know About AEPS - Aadhaar Enabled Payment System

Aadhaar Enabled Payment System (AEPS) is a payment system based on the Unique Identification Number (UID) that allows Aadhaar cardholders to perform financial transactions with ease using Aadhaar-based authentication. Through Aadhaar, the AEPS system intends to empower all areas of society by making financial and banking services accessible to all. AEPS is an Aadhaar-enabled payment system that allows you to transfer monies, make payments, deposit cash, make withdrawals, and check your bank balance, among other things. Let's know more about AEPS in this article.

Did you know?

In India, AEPS first started in November 2010.

What is the importance of using AEPS?

  • Customers can use their Aadhaar number to make payments at the point of sale (PoS) or micro-ATMs by giving Aadhaar authentication. This is a straightforward, secure, and user-friendly platform for financial transactions. 
  • The National Payments Corporation of India (NPCI) has taken yet another step to boost cashless transactions in India. All transactions can be completed through a Business Correspondent (BC) or a bank agent using a micro–ATM. 
  • Except for financial transfers, which must be done at a specific bank BC, all other transactions can be done at any bank BC. 
  • Your bank account must be connected to Aadhaar to use AEPS.
  • Payment Systems Using Aadhaar Enabled Bank Account (AEBA), holders from marginalised societies now have access to the banking system, thanks to the UIDAI's efforts to increase financial inclusion through the Aadhar card. 
  • The UIDAI, which serves as the centralised authority for Aadhar, has teamed up with the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) to create a platform that will allow marginalised people to gain secure access to banking via micro-ATMs using Aadhaar authentication.

How to do AEPS transaction?

AEPS is very simple to use. The steps listed below must be followed:

Step 1: Visit an ATM or a banking representative.

Step 2: In the PoS Machine, enter your 12-digit Aadhaar number and bank account number.

Step 3: Choose a transaction type (cash deposit, mini statement, withdrawal, balance enquiry, fund transfer), i.e., decide on the type of transaction you'd like to conduct.

Step 4: Enter the transaction's amount. Give your biometric information to verify your transaction (iris scan or fingerprint).

Step 5: In a few seconds, the transaction will be completed. You can collect your receipt from the ATM or bank correspondent.

What are the applications of AEPS?

The Unique Identification Authority of India (UIDAI) issues Aadhaar numbers to Indians to provide a variety of benefits. The National Payments Corporation of India (NPCI) has provided the AEPS apps and payment services to banks and financial institutions that use 'Aadhaar' for their KYC (Know-Your-Customer).

Citizens or customers can use their Aadhaar number to conduct financial and banking transactions at C2B, C2G points and undertake a variety of tasks, including:

  • Withdrawing money from an Aadhaar Card
  • Deposits in cash
  • Inquiry into the Balance
  • A short statement

Customers can receive an easy access to ATMs while maintaining the security of a traditional banking or financial institution. For biometric verification, AEPS services and systems use fingerprint/IRIS scans, assuring excellent security for each transaction.

Also Read: All About UPI– United Payments Interface

Services Provided by APES

The following are the services AEPS provides:

  • Cash Deposit 
  • Payment Transactions (C2B and C2G Transactions) 
  • Balance Inquiry 
  • Cash Withdrawal 
  • Aadhaar to Aadhaar Funds Transfer
  • A brief statement
  • Finger Detection at its Finest

AEPS Objectives

The main goals of AEPS are listed below.

  • To allow Indian banks to route inter-bank transactions triggered by Aadhar through a central switching and clearing agency.
  • To lay a solid foundation for a comprehensive set of Aadhar-enabled financial services.
  • To make information exchanging between banks as safe and secure as possible.
  • To help the RBI achieve its goal of seamless e-commerce payment, the bank established no limit to AEPS fund transfer in RBI.
  • To make the government of India entitlements such as Social Security Pension, Handicapped Old Age Pension Schemes, Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA), and others more accessible to both central and state government entities via Aadhar and authentication by the UIDAI. It is also accessible to beneficiaries.
  • To contribute to the government of India's and the Reserve Bank of India's (RBI) goal of promoting financial inclusion.

How do AEPS transactions work? 

The AEPS machine functions similarly to a POS machine. Instead of a debit/credit card pin, the retailer will need to enter the customer's Aadhaar number and use the customer's biometric data to confirm the transaction. You will require the following forms to carry out an AEPS transaction: Aadhar number, Fingerprint and Bank’s Issuer Identification Number (IIN) or name.

Stepwise procedure: 

Step 1: The customer must first provide their Aadhar number, fingerprint data, and financial transaction information via a micro-ATM.

Step 2: After that, the digital data, which will be encrypted, will be transferred to the UIDAI using a 'Bank Switch.'

Step 3: The UIDAI will verify and validate the data, and the result will be reflected as a YES/NO answer. Step 4: If the answer is "YES," the bank will begin the required authorisation process.                                                                

Points To Keep In Mind When Using AEPS

  • If you have more than one account with the same bank, the AEPS will only use the principal account. 
  • The AEPS supports only transactions between Aadhaar-linked bank accounts. If you want to use AEPS, you must link your account to your Aadhaar number. 
  • Making transactions with AEPS does not require a PIN or an OTP. 
  • Every day at 11 p.m., the cutover of AEPS transactions takes place. Any transactions made before this will be included in the statement. 
  • To use the AEPS service, your bank account must be connected to Aadhaar. This function, however, can only be used with one account per bank. 
  • The AEPS Fund Transfer Limit is a set amount of money that can be transferred from the Reserve Bank of India. The country's central bank has not imposed any limits for AEPS transactions
  • However, several Indian banks have set transaction limits when using the AEPS platform to prevent the exploitation of the payment system mechanism. 
  • Some banks have imposed a daily transaction restriction of ₹50,000 on all transactions done through the AEPS.

AEPS features and benefits include

• Ease of use 

• Safe and secure payment mechanism 

• Interoperability between banks 

• Encourages financial inclusion and serves the underbanked

• All bank account holders would access their accounts using Aadhaar authentication through AEPS.

AEPS simplifies payments of government schemes such as NREGA, Social Security pension, Handicapped Old Age Pension, and others by requiring only the Aadhaar number and biometric details to commence a transaction.

Why did the Indian Government launch AEPS?

The Indian government has set a goal of integrating all residents into the financial system. However, opening bank branches in distant settlements is not a viable option. As a result, the Indian government has devised the AEPS concept, which allows individuals from remote locations to easily access the banking system by allowing them to send and receive money and use micro-ATMs and banking correspondents to access a variety of financial and non-financial banking services. 

The benefit of implementing AEPS is that all transactions will require biometric authentication, which can be either a fingerprint scan or an iris scan. Individual signatures can be falsified, but neither the iris scan nor the fingerprints can be forged, making transactions safer. For fund transfers, people do not need to carry their passbook or debit card; all they need is their unique Aadhaar number and fingerprint. 

Also Read: Government extends Emergency Credit Line Guarantee Scheme till March 31, 2022

Conclusion

Aadhaar Enabled Payment System (AEPS) is a type of payment system based on the Unique Identification Number (UID) that allows Aadhaar card holders to perform financial transactions quickly and conveniently using Aadhaar-based authentication. AEPS may be used to make payments all over India. The reason behind the Indian government's launch of AEPS is discussed in this article. Customers can make payments using their Aadhaar numbers and give Aadhaar authentication at the point of sale or micro-ATMs that employ AEPS. It is a user-friendly payment system that is both safe and secure. We hope that this article provides sufficient information regarding AEPS, its objectives, applications, and how to use it.

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FAQs

Q: Is it possible to change my phone number online?

Ans:

You can't change your phone number online. For this, you must go to the nearest permanent registration centre.

Q: Will the number on my Aadhaar card change after being updated?

Ans:

No, your Aadhaar card number will not change due to the update.

Q: How will I submit the Self-Service Update Portal's supporting documents?

Ans:

You must upload a scanned copy of the original documents using the online Self-Service Updating Portal update method.

Q: What should I do if any authentication transaction records show that they failed?

Ans:

A predetermined error code is issued to all unsuccessful authentication transaction records. Examine the details of the displayed error code number against the failed transaction to determine the actual cause of the problem.

Q: Can people who don't have an Aadhaar card use this service?

Ans:

No, individuals have to connect their bank account with Aadhaar in order to avail AEPS. 

Q: Can you link your Aadhaar card to more than one bank account?

Ans:

Yes, you can. This is feasible.

Q: Is it necessary for the payee/beneficiary to have AEPS to receive funds?

Ans:

No, it isn't required.

Q: Who is eligible to use AEPS?

Ans:

This payment option is available to all Indian residents with a valid Aadhaar card and a bank account.

Q: How does a user go about enabling this service?

Ans:

To use AEPS, you must first link your bank account to your Aadhaar number. Then, call your bank and inform them that you'd like to begin using AEPS.

Q: What kind of bank account is required for AEPS?

Ans:

Your bank account must be connected to your Aadhaar number.

Q: What is an IIN number?

Ans:

This is a six-digit number that aids your bank's identification process.

Q: What is the definition of a business correspondent?

Ans:

An approved bank agent who provides terminal or mini-ATM services to banks is a business correspondent.

Q: What is Aadhaar?

Ans:

Aadhaar is a one-of-a-kind number given to Indian citizens by the Unique Identification Authority of India (UIDAI).

Q: What is AEPS?

Ans:

AEPS, which stands for Aadhaar Enabled Payment System, is a form of payment system. The National Payments Corporation of India provides the service (NPCI).

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