What is Aadhaar Enabled Payment System (AePS)?

Aadhaar Enabled Payment System (AePS) is a system developed by the National Payments Corporation of India (NPCI). Banking, as well as non-banking transactions, can be performed through a banking correspondent of any bank. Under Aadhaar Enabled Payment System (AePS), the Aadhaar number is used not only to identify the beneficiary but also to authenticate transactions. The financial transactions/services include cash deposit, balance enquiry, Aadhaar to Aadhaar fund transfer. Nonfinancial transactions like – Demographic Authentication, Best Finger Detection (BFD), and e-KYC can be done under AePS.

Under AePS financial services, People can send funds from one bank account to another account simply through their Aadhaar numbers. Further, to carry out transactions under AePS, customers do not have to mention their bank account details. They need not either furnish a debit card/credit card for making transactions. No OTP is required, only the fingerprints of the account holder will be required for authorising the transaction, which makes it safer. The biometric-based authentication is done by the Unique Identification Authority of India (UIDAI) while the National Payments Corporation of India (NPCI), which is enabling digital payments and settlement systems in India, does the switching, clearing, and settlement of financial transactions.

Multiple bank accounts can be linked with Aadhaar to avail AePS facility. However, only one account per bank can be used for availing this facility. In the case of customers having more than one account in one bank, only the primary account will be used under AePS. The system also allows online interoperable transactions at Micro-ATM through the Banking Correspondents (BCs) of any bank using Aadhaar authentication.

AePS financial service is operational since January 2011. The idea of the Government of India coming up with AePS is mainly to help the people from far-off places particularly from villages where banking services are not available. With the help of AePS people can easily send/receive money and also avail other financial and non-financial banking facilities with the help of Micro ATMs and banking correspondents.