Aadhaar Enabled Payment System (AePS) is a secure and convenient payment mechanism in India that allows individuals to perform banking transactions using their Aadhaar number and biometric authentication. It leverages the unique 12-digit Aadhaar number, issued by the Unique Identification Authority of India (UIDAI), to facilitate seamless financial transactions. Here are detailed notes on Aadhaar Enabled Payment System (AePS):
1. Authentication through Aadhaar: AePS uses the Aadhaar number and biometric authentication (fingerprint or iris scan) to verify the identity of the user. This eliminates the need for traditional methods like signature or PIN-based authentication.
2. Key Features of AePS:
- Financial Inclusion: AePS aims to promote financial inclusion by enabling banking services for individuals without traditional bank accounts or those residing in remote areas.
- Interoperability: AePS is interoperable, meaning customers can transact with any bank’s business correspondent (BC) using their Aadhaar number and biometric authentication.
3. Types of Transactions under AePS:
- Balance Enquiry: Customers can check their bank account balance by providing their Aadhaar number and biometric authentication.
- Cash Withdrawal: AePS allows individuals to withdraw cash from their bank account by using their Aadhaar number and biometric authentication at BC outlets.
- Aadhaar to Aadhaar Fund Transfer: Customers can transfer funds from their bank account to another Aadhaar-linked bank account using AePS.
- Payment Transactions: AePS facilitates payments for various government subsidies, pension schemes, and other benefits directly into beneficiaries’ bank accounts.
4. AePS Transaction Limit: As of my knowledge cutoff date in September 2021, AePS transactions are subject to daily and monthly transaction limits as per RBI guidelines. These limits may vary for different types of transactions.
5. Security and Privacy:
- Aadhaar authentication through AePS ensures a high level of security and privacy by using biometric data for user verification.
- Aadhaar data is encrypted and securely transmitted during transactions to protect against any unauthorized access.
6. AePS and Pradhan Mantri Jan Dhan Yojana (PMJDY): AePS plays a significant role in the implementation of the Pradhan Mantri Jan Dhan Yojana, a government scheme aimed at financial inclusion for all citizens. Under PMJDY, beneficiaries can access various banking services through AePS-enabled BCs.
7. Limitations and Challenges:
- Infrastructure: AePS requires a robust biometric authentication infrastructure at BC outlets and banks to support seamless transactions.
- Connectivity: To use AePS, beneficiaries need access to a stable internet or mobile network connection, which may be limited in certain rural areas.
8. AePS and Other Payment Systems: AePS complements other digital payment systems like Unified Payments Interface (UPI) and Bharat Interface for Money (BHIM) by providing financial services to those who may not have smartphones or access to online payment platforms.
AePS is a transformative payment system that harnesses the power of Aadhaar and biometric authentication to bring financial services to the masses. It helps bridge the digital divide by offering secure and inclusive banking services to individuals across all strata of society, making financial transactions more accessible and convenient for millions of people in India.