AEPS - Aadhaar Enabled Payment System

1. Direct Account Deduction: Transaction amounts are deducted directly from the user's Aadhaar-linked bank account, ensuring smooth and straightforward processing. 

1. 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. 

Benefits of AEPS

The Aadhaar-enabled payment system (AePS) offers numerous benefits for all segments of society: 

1. Ease of Use: AePS is designed to be simple and user-friendly, making it accessible for individuals to carry out various financial transactions effortlessly. 

1. Biometric Security: The system uses biometric authentication, such as fingerprints or iris scans, alongside the Aadhaar number to ensure secure and trustworthy transactions. 

1. Empowering the Underprivileged: AePS provides underprivileged communities with access to essential banking services and facilitates digital financial transactions, fostering financial inclusion. 

1. Privacy of Bank Details: Transactions can be completed without disclosing bank account details, enhancing users' privacy and security. 

1. Convenient Bank Access: Users can easily access their bank accounts through Aadhaar authentication, reducing the need for physical visits to the bank. 

1. Enhanced Transaction Security: Biometric verification and Aadhaar-based authentication add an additional layer of security, making AePS transactions highly secure and dependable. 

1. 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. 

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: 

1. The individual initiating the transaction. 

1. An intermediary, such as a merchant, store owner, or banking correspondent, facilitates the transaction. 

1. The Aadhaar-enabled bank. 

1. UIDAI is responsible for verifying the fingerprint. 

1. NPCI (National Payments Corporation of India) is responsible for settling the transaction.

AEPS Cash Withdrawal Limit & AEPS Funds Transfer Limit

1. The National Payments Corporation of India (NPCI) has set a maximum limit of Rs. 10,000 per AePS transaction. 

1. 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. 

What is Required to Use the AEPS Facility 

To access the AePS facility, the following requirements must be met: 

1. Your Aadhaar card must be linked to your bank account. 

1. You need your Aadhaar number. 

1. Fingerprint biometric verification of the Aadhaar cardholder is necessary. 

1. A micro ATM is required for transactions. 

How to Use AEPS for Transactions?

The process that must be followed to used AEPS is mentioned below: 

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.

Charges for AEPS Transactions

As per NPCI’s latest guidelines, AEPS transaction fees are as follows:

1. Bank Charges: 0.5% to 1% per transaction (capped at ₹15). Example: A ₹1,000 withdrawal may cost ₹5–₹10.
2. NPCI Settlement Fee: Flat ₹0.25 per transaction.
3. UIDAI Authentication Fee: Free for AEPS (subsidized by the government).
4. Micro ATM Charges: BCs (Business Correspondents) may add ₹5–₹10 service fee.

Banking Services Offered by AEPS 

1. Cash Deposit 

1. Cash Withdrawal 

1. Balance Enquiry 

1. Mini Statement 

1. Aadhaar-to-Aadhaar Fund Transfer 

1. Authentication 

1. BHIM Aadhaar Pay 

Other Services Offered by AEPS

1. eKYC 

1. Tokenisation 

1. Aadhaar Seeding Status 

Things to Keep in Mind While Using AEPS

1. Aadhaar Linkage: Ensure your bank account is linked to your Aadhaar so you can use the AePS facility. 

1. 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. 

1. 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. 

1. 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. 

Objectives of AEPS and Why It Was Introduced

The objectives of AEPS are given below:

1. To ensure that bank customer is 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.
2. To help meet the goal of the Reserve Bank of India (RBI) and the Central Government of India of enabling financial inclusion for all.
3. To help RBI meet the goal of electronification of retail payments.

1. Enabling banks to direct Aadhaar-initiated interbank transactions through a centralised switching and clearing organisation.
2. 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.
3. To enable interoperability across banks in a safe and secure way.
4. To establish a foundation for services related to Aadhaar-enabled banking.

About AEPS

AEPS is a domestic-only payment system for Aadhaar-linked bank accounts. It enables:

1. Cash withdrawals/deposits at micro ATMs.
2. Fund transfers (Aadhaar-to-Aadhaar).
3. Balance inquiry and mini statements.
4. No international transfers – AEPS is restricted to Indian bank accounts.