April 26, 2023

What is Aadhaar Enabled Payment System: Meaning, Registration, Benefits, & Features

The government of India and RBI has taken initiatives to empower every section of society by providing banking services through Aadhaar. AEPS or Aadhaar Enabled Payment System allows you to conduct financial transactions by using your Aadhaar number. However, to activate this system, you need to link your bank account with the Aadhaar.
Read on to know more about the Aadhaar Enabled Payment System!

Aadhaar Enabled Payment System (AEPS): What is it?

National Payments Bank Corporation of India offers a replacement payment service called AEPS to banks and financial institutions. Under this system, you can make payments using your Aadhaar number. Here Aadhaar is used as your identification to access AEPS service provider for conducting interbank or intrabank transactions.
You can use this cashless transaction method for all payments except fund transfers through a micro ATM or bank agent. However, for fund transfer, you need to visit the specific bank's Business Correspondent (BC). Last but not least, your bank account should be linked with Aadhaar to activate the Aadhaar Enabled Payment System.

What Are its Objectives?

Let’s take a look at the objectives of the Aadhaar Enabled Payment System:
  • It helps customers access their Aadhaar-linked bank accounts to carry out transactions like cash withdrawals, deposits, balance enquiries, and more. It is a centralised switching and clearing organisation that helps the bank to conduct Aadhaar-initiated intrabank or interbank fund transfers.
  • The Government of India and RBI aim at encouraging the digitisation of payment and boosting financial inclusions.
  • UIDAI supports AEPS. So, the fund distribution procedure for government programmes like Handicapped Old Age Pension, MGNREGA, etc., has been simplified using this method.
  • AEPS is a smart initiative to ensure all bank customers are empowered to use Aadhaar as identification while conducting transactions. It focuses on a safe, secure, and cashless transaction procedure.

What Are the Features of the Aadhaar Enabled Payment System?

Now that you know the Aadhaar Enabled Payment System meaning and its objectives, let’s look into its features:
  • It will allow transactions between Aadhaar-linked bank accounts only. This method is operated internally across various bank accounts.
  • With AEPS, the under-banked sections will also get included in the financial ecosystem.
  • Every individual can access the bank account through Aadhaar authentication. You can conduct transactions by entering your biometric details and Aadhaar number only.
  • It allows an Aadhaar card holder to initiate balance inquiry, cash withdrawals, and deposits, get mini bank statements, etc., through Banking Correspondent (BC).
  • You can seamlessly receive benefits of government schemes like Social Security pension, NREGA, etc., of any State or Central government through Aadhaar verification.

How is AEPS Beneficial for You?

Here’s more on the benefits of the Aadhaar Enabled Payment System:
  • When you perform transactions through AEPS, you no longer need to provide bank details. To keep the entire procedure safe and secure, it asks for your biometric and Aadhaar numbers only.
  • By enabling the AEPS transaction system in your shop or business organisation, you earn commissions for every transaction.
  • It allows you to provide a mini-banking facility in your space, thereby attracting potential customers.
  • Aadhaar Enabled Payment System can be activated instantly.
  • The micro PoS machine is portable and can be carried along with in remote villages to make it easier for users to perform transactions.

How to Use Aadhaar Enabled Payment System?

Aadhaar card holders after initiating the AEPS facility by linking their Aadhaar to their bank account can follow the steps below to conduct seamless transactions:
  • Visit the local BC (banking Correspondent)
  • Locate the PoS machine and enter your Aadhaar number
  • Choose the transaction mode and enter your bank’s name
  • Enter the amount you want to withdraw or pay
  • Provide your biometric to confirm the transaction
  • You will get a receipt once the transaction has been completed
Note: You can reach a banking correspondent if the bank does not have any nearest branch. Banks appoint these correspondents as an intermediary to provide you with banking services.

How Does AEPS Works?

Aadhaar Enabled Payment System, as the name suggests, is entirely operated by the Aadhaar number. You can continue hassle-free financial transactions by simply entering your 12-digit UIN. However, that does not mean anyone can complete the transaction by showing an Aadhaar card and simply entering the number. Here comes the importance of biometrics.
You can complete the transaction, once the UIDAI authenticates your biometric along with the Aadhaar number. So, Vikas cannot come up with Akash’s Aadhaar card and complete a transaction on his behalf. Aakash needs to be present and use his fingerprint for the verification.
Thus, Aadhaar Enabled Payment System involves several facilitators to conduct different steps of verification. Here are the mediums involved in every transaction:
  • The person performing the AEPS transaction
  • Adhaar-enabled banking institution
  • The Banking Correspondent or storeowners and merchants acting as an intermediary
  • UIDAI to authenticate the biometric
  • The final transaction settlement is made by NPCI

What Are the Services Offered by AEPS?

Take a look at the bunch of services offered by AEPS:

Banking Services:

  • Aadhaar to Aadhaar funds transfer
  • Cash Withdrawal
  • Cash Deposit
  • Mini statement
  • Balance Enquiry
  • Authentication
  • BHIM Aadhaar Pay

Other Services:

  • Aadhaar Seeding Status
  • Best finger detection
  • e-KYC
  • Tokenisation

What Do You Need for AEPS Transactions?

Here is the list of things that you will need to conduct Aadhaar Enabled Payment System transactions:
  • Present self (Aadhaar holder) with Bio-metrics (Finger and/or IRIS)
  • Give Bank name
  • Remember Aadhaar
  • Micro ATM
  • Assisted mode

Bottom Line

Aadhaar Enabled Payment System is an extraordinary initiative by the Government of India to promote safe and cashless transactions. If you are a permanent resident of this country, holding a valid Aadhaar card, you can opt for this payment mode. It will save you time and provide easy transaction facilities. Moreover, you can earn from this initiative if you are a merchant.

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