The Aadhaar Enabled Payment System (AEPS) is a payment platform developed by the National Payments Corporation of India (NPCI) that facilitates financial transactions through Aadhaar-based authentication. It enables Aadhaar cardholders to carry out transactions using their Aadhaar number and biometric verification, such as fingerprint or iris scans.
AEPS empowers individuals by providing access to banking and financial services without the need to share bank account details, ensuring privacy and security. Transactions can be performed at Points of Sale (PoS) or micro ATMs, allowing fund transfers, cash withdrawals, and other services, particularly benefiting those without traditional banking access.
About AEPS:
The payment service known as the Aadhaar Enabled Payment System (AEPS) enables bank customers to access their Aadhaar-enabled bank account and carry out standard banking operations such as checking their balance, making cash withdrawals, and sending money overseas through a Business Correspondent by using Aadhaar as their identity.
Objectives of AEPS: Why It Was Introduced
The objectives of AEPS are given below:
- To ensure that bank customers are empowered to use their Aadhaar as proof of identity to conduct basic banking transactions like cash withdrawal, cash deposit, fund transfer, and balance enquiry, and also avail of the mini statement facility through a business correspondent.
- To help meet the goal of the Reserve Bank of India (RBI) and the Central Government of India of enabling financial inclusion for all.
- To help RBI meet the goal of electronification of retail payments.
- Enabling banks to direct Aadhaar-initiated interbank transactions through a centralised switching and clearing organisation.
- To enable the government to facilitate the disbursing of government schemes such as NREGA, social security pension, etc., where Aadhaar is used as a valid document to authenticate such availing of schemes.
- To enable interoperability across banks in a safe and secure way.
- To establish a foundation for services related to Aadhaar-enabled banking.
Read Blog : How to Start a Successful AEPS Business in India
Features of AEPS
Direct Account Deduction: Transaction amounts are deducted directly from the user’s Aadhaar-linked bank account, ensuring smooth and straightforward processing.
Basic Banking Services: AePS facilitates essential banking services, including cash deposits, fund transfers (both interbank and intrabank), cash withdrawals, balance inquiries, and mini statements, all of which can be carried out through banking correspondents. Payments can be made using the Unique Identification Number (UID) in this payment system. All Aadhaar cardholders can use AEPS to make payments, transfer money, withdraw money, make a deposit, and perform other bank-related tasks.
Benefits of AEPS
The Aadhaar-enabled payment system (AePS) offers numerous benefits for all segments of society:
Ease of Use: AePS is designed to be simple and user-friendly, making it accessible for individuals to carry out various financial transactions effortlessly.
Biometric Security: The system uses biometric authentication, such as fingerprints or iris scans, alongside the Aadhaar number to ensure secure and trustworthy transactions.
Empowering the Underprivileged: AePS provides underprivileged communities with access to essential banking services and facilitates digital financial transactions, fostering financial inclusion.
Privacy of Bank Details: Transactions can be completed without disclosing bank account details, enhancing users’ privacy and security.
Convenient Bank Access: Users can easily access their bank accounts through Aadhaar authentication, reducing the need for physical visits to the bank.
Enhanced Transaction Security: Biometric verification and Aadhaar-based authentication add an additional layer of security, making AePS transactions highly secure and dependable.
Reach to Remote Areas: AePS enables the installation of micro Point of Sale (PoS) devices in remote areas, allowing people in underserved regions to access banking services easily.
Read Blog : Must Follow Guidelines for AePS Portal Business Registration
How Does AEPS Work?
Accessing essential financial services is as simple as recalling your 12-digit Aadhaar number, which is linked to your bank account. To complete a transaction or use the AePS (Aadhaar-enabled Payment System), your fingerprint must be authenticated through Aadhaar. The bank will process the transaction only after the UIDAI (Unique Identification Authority of India) verifies your fingerprint.
Consider a scenario where an individual claiming to be Raj provides an Aadhaar number registered under Raj’s name. To finalise a purchase, Anvay must supply his fingerprint for verification. If the fingerprint matches, the bank will authorise the transaction. This process involves several key entities:
- The individual initiating the transaction.
- An intermediary, such as a merchant, store owner, or banking correspondent, facilitates the transaction.
- The Aadhaar-enabled bank.
- UIDAI is responsible for verifying the fingerprint.
- NPCI (National Payments Corporation of India) is responsible for settling the transaction.
What is Required to use the AEPS Facility
To access the AePS facility, the following requirements must be met:
- Your Aadhaar card must be linked to your bank account.
- You need your Aadhaar number.
- Fingerprint biometric verification of the Aadhaar cardholder is necessary.
- A micro ATM is required for transactions.
AEPS Cash Withdrawal Limit & AEPS Funds Transfer Limit
The National Payments Corporation of India (NPCI) has set a maximum limit of Rs. 10,000 per AePS transaction.
While the Reserve Bank of India (RBI) does not impose any restrictions on AePS transactions, some banks have set a daily limit of Rs. 50,000 for total transactions.
Read Blog : Understanding the AEPS Service Portal and How Does it Benefit Financial Services?
Charges for AEPS Transactions
AePS transactions tend to be slightly more expensive than UPI transactions, with costs ranging up to Rs. 15 per transaction. The fees are divided as follows:
- The Unique Identification Authority of India (UIDAI) currently does not charge for AePS transactions, but fees may apply in the future.
- Banks may charge up to 1% of the transaction amount, with a minimum fee of Rs. 5 and a maximum of Rs. 15.
- NPCI may levy a settlement fee of 15 to 25 paise.
Note: However, the Indian government has covered AePS transaction costs, including MDR fees, making them free as of now.Banking Services Offered by AEPS
- Cash Deposit
- Cash Withdrawal
- Balance Enquiry
- Mini Statement
- Aadhaar-to-Aadhaar Fund Transfer
- Authentication
- BHIM Aadhaar Pay
Other Services Offered by AEPS
- eKYC
- Tokenisation
- Aadhaar Seeding Status
Things to Keep in Mind While Using AePS
Aadhaar Linkage: Ensure your bank account is linked to your Aadhaar so you can use the AePS facility.
PIN or OTP: Depending on your bank’s process, you may need a Personal Identification Number (PIN) or a One-time Password (OTP) to complete transactions.
Primary Account Usage: If multiple accounts are linked to your Aadhaar, AePS transactions will be processed using the primary account. Ensure the correct account is selected.
Aadhaar-linked Accounts: The AePS service is only available for Aadhaar-linked bank accounts. Make sure your bank account is active and properly linked to Aadhaar.
Read Blog : Why Choosing the Right AEPS API Provider is Crucial for Your Business Success
How to use AEPS for Transactions?
Step 1: Go to a micro ATM or banking correspondent
Step 2: Provide Aadhaar number and bank name
Step 3: Choose the type of transaction you want to make
Step 4: Provide verification through fingerprint/iris scan
Step 5: Collect your receipt.
Conclusion:
AEPS (Aadhaar Enabled Payment System) is a simple and secure platform that enables seamless banking transactions through Aadhaar-based authentication. It plays a crucial role in promoting financial inclusion by allowing users to access essential banking services via micro ATMs and business correspondents. With AEPS, users can effortlessly make payments, transfer funds, and perform other financial transactions. Noble Web Studio, as the best and top AEPS service provider, ensures a secure, reliable, and efficient solution for hassle-free banking. Linking your bank account to Aadhaar simplifies financial management, making transactions more accessible and convenient.
FAQs – AEPS (Aadhaar Enabled Payment System Services)
Ans. AePS refers to the Aadhaar Enabled Payment System. It is a digital payment system in India that utilizes Aadhaar authentication to conduct financial transactions at Micro ATMs or Point of Sale (PoS) terminals via Business Correspondents (BCs) of any bank.
Ans. AePS transactions do not have a predefined minimum deposit limit. However, banks may impose their own restrictions to prevent misuse. Some financial institutions set a daily transaction cap of ₹50,000 for AePS. It is recommended to check with your bank for precise transaction limits.
Ans. Although there is no universal restriction on the number of AePS withdrawals, banks generally set a daily withdrawal cap, usually around Rs. 50,000, with a maximum limit of Rs. 10,000 per transaction.
Ans. AePS settlement refers to the process of routing interbank transactions during standard banking operations. Institutions participating in the AePS network must maintain a settlement account with the Reserve Bank of India (RBI). Before becoming a member, they need to obtain authorization from the RBI and provide a certified copy to NPCI.
Ans. No, AePS is simple and user-friendly. Aadhaar cardholders can complete transactions effortlessly by providing their Aadhaar number along with biometric authentication, making it an accessible system for financial transactions.
Ans. The primary aim of AePS is to offer banking and financial services in rural and remote regions where bank branches are unavailable. It enables transactions using micro ATMs and banking correspondents, requiring only Aadhaar credentials and biometric verification for authentication.
Ans. Yes, AePS ensures a high level of security. Transactions are processed only after verifying the user’s Aadhaar number and biometric details, making it a safe and reliable payment system.
Ans. Yes, it is necessary to link your Aadhaar with your bank account, as AePS transactions are processed through Aadhaar-linked accounts.
Ans. A banking correspondent is an individual or organization appointed by a bank to offer banking services in areas where branches are unavailable. They act as intermediaries, facilitating various banking operations on behalf of the bank.
Ans. AePS offers multiple financial services, including fund transfers between banks, cash withdrawals, deposits, balance inquiries, and more. It provides Aadhaar cardholders with seamless access to essential banking services.