Aadhar Enabled Payment System| SprintOPN

Fintech

Mar 06, 2025

The Aadhaar Enabled Payment System (AEPS) is a payment service that enables a bank user to access their Aadhaar-enabled bank account and carry out standard banking operations, such as checking their balance, withdrawing cash, and sending money through a business correspondent, using their Aadhaar as identification.

What is AEPS?

AEPS is a bank-driven framework that facilitates online interoperable financial transactions at Points of Sale (PoS) or Micro ATMs through any banking institution's Business Correspondent (BC) or Bank Mitra, utilizing Aadhaar authentication.

Table of Content

1. How Does APES Work?

2. Features of AEPS

3. Benefits of AEPS

4. Types of APES

5. How to use AEPS

6. Advantages and Disadvantages of AEPS

7. Service Offered by AEPS

8. Objective of AEPS

9. Future of AEPS

How does AEPS Work?

Step 1- Visit a micro-ATM or banking correspondent.

Step 2- Enter the number from your Aadhaar.

Step 3- Select the type of transaction.

Step 4- Put the sum in.

Step 5- Give your biometric information (iris scan or fingerprint).

Step 6 - Verify the transaction.

Step 7- Get your money back or get a confirmation message.

Features of AEPS?

1. Aadhar-based authentication: Using the Aadhaar number, AEPS facilitates transactions while ensuring security through biometric authentication (fingerprint or iris scan).

2. Interoperability: Regardless of the bank a user is registered with, AEPS enables them to conduct transactions across many banks and financial organizations.

3. Basic Transaction: The system facilitates the following simple banking transactions:

1. Cash Withdrawal: Customers have the option to take money out of their accounts.

2. Balance Inquiry: Customers can view the amount in their accounts.

3. Mini Statement: A summary of recent transactions is available to users.

4. Funds transfer: Moving funds between bank accounts is known as a fund transfer.

4. Offline Transaction: AEPS can operate with a basic biometric-based system in places with poor internet connectivity.

5. Security: The system offers a high degree of protection for user transactions, lowering the danger of fraud, because it depends on biometric data (fingerprint or iris).

6. Financial Inclusion: For those living in rural or isolated locations who might not have access to smartphones or traditional banking infrastructure, AEPS offers banking services.

7. Fast and Simple Access: AEPS enables consumers to conduct financial transactions with as little infrastructure as possible, such as a biometric-scan-capable point-of-sale (POS) terminal.

8. Cost-effective: It provides a reasonably priced banking and financial transaction solution, particularly in isolated locations where traditional banking options may be limited.

9. 24/7 Availability: AEPS offers 24/7 banking services and is accessible anytime.

Benefits of AEPS

For every group in society, the Aadhaar-enabled payment system (AePS) provides several advantages:

1. Ease of Use: People may easily do a variety of financial transactions with AePS because it is made to be straightforward to use.

2. Biometric Security: To guarantee safe and reliable transactions, the system combines the Aadhaar number with biometric authentication, such as fingerprint or iris scans.

3. Empowering the Underprivileged: By facilitating digital financial transactions and giving impoverished communities access to basic banking services, AePS promotes financial inclusion.

4. Bank Information Privacy: By enabling transactions without revealing bank account information, users' security and privacy are improved.

5. Convenient Bank Access: By using Aadhaar authentication, users may quickly access their bank accounts, negating the need for in-person bank visits.

Types of AEPS

1. Aadhar Pay: Uses a customer's Aadhaar number to enable shops to transfer funds to any bank account.

2. Balance Enquiry: Enables customers to use their Aadhaar number to check the balance of their bank accounts.

3. Paytm AEPS: This service, which is a component of the Paytm digital payment platform, enables users to conduct financial transactions by utilizing their Aadhaar number.

4. BHIM Aadhar Pay: Using their Aadhaar number and biometric authentication, customers can pay participating merchants with this merchant payment service.

How to use AEPS For transaction?

The following describes the steps that must be taken to use AEPS:

Step 1: Visit a banking correspondent or micro ATM.

Step 2: Enter the bank name and Aadhaar number.

Step 3: Select the transaction type and what kind of transaction you wish to do.

Step 4: Enter the transaction amount to proceed with the transaction.

Step 5: Use a fingerprint scan to confirm the transaction.

Step 6: Get your invoice.

The Advantages and Disadvantages of AEPS

Features	Advantages	Disadvantages
Convenient to use	Eliminates the need for debit cards and PINs by streamlining access through the use of Aadhaar and fingerprint.	dependent on internet and fingerprint scanner technologies, which can be unreliable in places with inadequate connectivity.
Easy to Access	Uses nearby stores with micro ATMs to make banking easier in places far from banks.	AEPS services are not well known or accessible, especially in places with poorer internet connections.
Transaction Type	Meets basic financial needs by offering banking services including deposits and cash withdrawals.	Its usefulness for more complex financial needs, such as loans, is limited because it does not enable complex banking transactions.
Fraud and Risk	AEPS is normally safe, but if security measures are inadequate, there is a chance of fraud.	In places where security procedures are not rigorously followed, fraud risks may rise.
Security	By guaranteeing that only the account holder may access their account, biometric authentication can improve security.	raises further privacy issues regarding the security and use of biometric data.
Inclusion Requirement	Improves financial inclusion by reaching underserved populations in remote locations	Access is restricted to those who have an Aadhaar number; anyone without this identity cannot enter.

Serviced offered by AEPS

The other services offered by the AEPS are as follows:

1. eKYC

2. Tokenization

3. Aadhaar seeding status

4. Authentication

AePS's goals

1. Encourage Financial Inclusion: Give those living in rural and underserved areas access to banking and financial services.

2. Encourage the Digital India Project: Reduce the amount of cash used and streamline digital transactions.

3. Simplify Transactions: Make both financial and non-financial transactions simple by offering an Aadhaar-based payment mechanism.

4. Promote Cashless Economy: To support the government's goal of a cashless economy, promote digital payments.

5. Interoperability Across Banks: Use Aadhaar verification to facilitate easy transactions across several banks.

Transaction Limit for AEPS

A daily cap of Rs. 50,000 on the total number of transactions has been imposed by certain banks. The NPCI has set a maximum withdrawal limit of Rs. 10,000 per AEPS transaction.

What does the AEPS's future hold?

To enhance financial transactions, the Indian government and the National Payments Corporation of India (NPCI) launched the Aadhaar Enabled Payment System (AEPS). For this, they intended to employ an Aadhaar card. This payment method is groundbreaking. This payment method was made by the creators. In these rural locations, they hope to provide improved employment opportunities. Access to banking facilities is restricted in certain regions. As more Indians become aware of the advantages of AEPS, its future seems quite promising. Several Indian banks have already implemented AEPS.

Conclusion: AEPS

In India, the Aadhaar Enabled Payment System (AePS) is a revolutionary digital payment system that has contributed to the increased accessibility and security of banking services. It is anticipated to keep developing and be crucial to India's financial future.

FAQs- AEPS

Q1. What is Aeps and how it works?

Q2. Are AEPS and UPI the same?

AEPS and UPI serve different purposes. AEPS operates by utilizing Aadhaar and biometric authentication for transactions, specifically targeting rural and underbanked populations.

In contrast, UPI (Unified Payments Interface) facilitates instantaneous payments through mobile numbers or UPI IDs, emphasizing digital transactions

Q3. Is AEPS safe to use?

AEPS, or Aadhaar Enabled Payment System, is a secure payment solution offered by the National Payments Corporation of India (NPCI). It enables individuals with bank accounts linked to their Aadhaar numbers to conduct financial transactions effortlessly through Aadhaar-based authentication.

Q4. What is the limit of AEPS per day?

The daily transaction limit for the Aadhaar Enabled Payment System (AEPS) is determined by individual banks and the specific nature of the transaction. The highest permissible cash withdrawal amount through AEPS is Rs 10,000 for each transaction.

Q5. Who Controls AEPS?

The Aadhaar Enabled Payment System (AePS) is a banking-oriented framework established by the National Payments Corporation of India (NPCI).

Q6. What is the age limit for AEPS?

As per the guidelines issued by the Reserve Bank of India (RBI), there is no specific age limit for using AEPS.