Aadhaar Enabled Payment System

AEPS or Aadhaar enabled payment system is an Aadhaar-based authentication model for financial transactions done on micro-ATMs/Point of Sale (PoS). UIDAI joined hands with different stakeholders such as the National Payments Corporation of India (NCPI) and Reserve Bank of India (RBI). The collaboration resulted in development of a platform for AEBA (Aadhaar Enabled Bank Account) holders from the marginalized sections of the society.

The platform allows the said AEBA holders to access banking and related facilities with Aadhaar authentication on Micro ATMs. To use this service, a user should have his/her bank account linked with the Aadhaar Number. As a customer, you can carry out the transactions either through a BC (Business Correspondent) or bank agent on a Micro ATM. But for fund transfer, you need to go to a BC of a bank.

So How Aadhaar Enabled Payment System Works?

• You need to provide details of the financial transaction, Aadhaar, and fingerprint on a micro ATM.
• The data you share is in an encrypted form. Through a ‘Bank Switch’ the data is digitally sent to UIDAI.
• After authentication of data by UIDAI, you can see the result as either a Yes or No.
• If the response is a ‘Yes’, then the bank will take ahead the transaction.

AEPS for Merchant Payment

The Government of India has introduced facilities to make financial transactions easier for merchants and business correspondents. For instance, the Reserve Bank of India with its two Working Groups focused on Micro ATM standards and the Central Infrastructure & Connectivity for Aadhaar based financial inclusion. Both the groups worked to make it possible to have Aadhaar Enabled Payment system for merchants. The transactions that can be done using AEPS are:

• Cash deposit
• Fingerprint detection
• Cash withdrawal
• Aadhaar to Aadhaar fund transfer
• Payment Transactions (C2B, C2G Transactions)
• Balance enquiry
• Get a mini statement

At the time of enrolment, the user has to provide his/her fingerprint, Aadhaar number, and IIN. An IIN is a 6-digit number that identifies the bank with which the customer is associated.

How to Use Aadhaar Enabled Payment System?

Below-given are steps for AEPS registration:

• Go to a banking corresponded nearest to your area. The banking correspondent need not necessarily be the one of your bank. He/she can be of any bank.
• On the PoS machine, enter your 12-digit UID (Unique Identity Number). This is the number on your Aadhaar Card.
• Select the type of transaction – Cash withdrawal, cash deposit, balance enquiry, intrabank or interbank fund transfer, obtain a mini statement.
• Select the bank name and enter the transaction amount.
• Now you need to authenticate/validate the transaction through your biometric (iris/fingerprint scan).
• When the transaction completes, you will get a receipt.

Interesting Facts about AEPS

Here are a few important details about AEPS:

• Service Activation: There are no particular steps for service activation. The transaction takes place within a minute or two of Aadhaar seeding.
• Things Needed for Transactions: For transaction, the things required are Micro ATM, bank name, the physical presence of the Aadhaar holder and his/her fingerprint data.
• Transaction Charges: No charges apply when customers make a transaction. However, the merchant/business correspondent may have to pay a fee to the bank based on the bank’s discretion. The transactions on AEPS are costlier than that on UPI. The transaction cost can go up to Rs. 15 per transaction. The minimum charges are Rs. 5.
• Limit on Fund Transfer: Banks and RBI do not define any limit on the fund amount that can be transferred to the merchant. The fund transfer limit thus varies from a bank to another. But several banks have capped the daily transaction limit to Rs. 50,000 to avoid the misuse of the system.

  Out of the total charge for transactions, the UIDAI may charge only a nominal fee or nothing at all. NCPI may charge anywhere between 15 paise and 25 paise, whereas the bank may charge up to 1% of the transaction.

Why Use Aadhaar for Authentication?

The Aadhaar database holds biometric and demographic information of the Aadhaar Card holders. While demographic details are taken usually for every identity and address proof documents, biometric data is not. It is only UIDAI that stores this information. The Aadhaar database of an individual contains fingerprints of all the ten fingers and iris image of both the eyes. The biometric data collected cannot be duplicated as it is unique for every person.

This is why the government gives importance to Aadhaar authentication for several purposes. Also, the Aadhaar Card number is unique to every individual. This is why your Aadhaar number acts as a proof during banking transactions. Thus, use of Aadhaar for authentication is considered safe and secure with low rates of malpractices.

Intentions behind Aadhaar Enabled Payment System

Below-given are the objectives of Aadhaar enabled payment system:

• To allow users access financial transaction activities with user of their Aadhaar Number. AEPS gives you ease of access to basic banking services such as cash deposit/withdrawal, get bank statement, etc.
• To promote electronic payments, especially for the retailers.
• To entrust Aadhaar enabled payments on a single authority such as the central switching and clearing agency.
• To promote Aadhaar enabled banking services. It widens the room for financial inclusion.
• To support inter-operability for banks in secured and safe manner.
• To ease disbursements of Government entitlements such as Social security pension, NREGA, Handicapped old age pension, and a lot more for any State or Central government bodies using authentication or Aadhaar as supported by the UIDAI.

BHIM Aadhaar Pay

Merchants can now receive payments digitally from their customers using the BHIM Aadhaar Pay. Under BHIM Aadhaar Pay customers can make a payment over the counter through Aadhaar authentication. The Aadhaar app allows making the payment through a thumb impression/scan. The BHIM app on the other hand uses a virtual address for payment transfers between individuals without disclosing one’s bank account number.

Using the BHIM Aadhaar Pay, merchants can digitally receive payments from customers. Through Aadhaar authentication, customers can pay over the counter to merchants. Merchants eligible are the ones with an acquiring bank on the BHIM Aadhaar Pay network.

• The merchants should have an Android mobile to download BHIM Aadhaar app for this purpose.
• They can receive payments after authenticating the customer’s fingerprint biometric data.
• The payment reaches to the merchant instantly. It comes from the customer’s Aadhaar enabled bank account.
• The merchant has to connect the biometric scanning device to his/her smartphone to accept payments from customers.
• To make a digital payment, the customers do not need a credit card/debit card or even smartphone for the payment completion.