The Ultimate Guide To Aadhaar Enabled Payment System (AEPS) - BANKING TERMS FOR EXAMS

Aadhaar Enabled Payment System (AEPS) – A system that leverages Aadhaar online authentication and enables AEBAs to be operated in anytime-anywhere banking mode by the marginalized d financially excluded segments of society through micro ATMs.

Aadhaar Enabled Payment System

Aadhaar Enabled Payment System or AEPS is a payment service developed by the National Payments Corporation of India (NPCI) allowing banks, financial institutions to use “Aadhaar” number and online UIDAI authentication for transactions through their respective Business correspondent service centres. AEPS, a new age banking service has been approved by the Reserve Bank of India (RBI). It is also used for routing interbank ATM transactions and Interbank Mobile Payment Service (IMPS). The AEPS allows transactions using Aadhaar and biometric authentication and enables a person to carry out financial transaction on a micro-ATM provided by a banking correspondent.

Spice Money, the financial technology service from Spice Digital, been authorized by the National Payments Corporation of India (NPCI) to offer AEPS services since October, 2016. It is a unique and innovative system that allows trader/merchant to collect payment, operate as mini ATM for cash withdrawal, deposits and balance enquiry using Aadhaar Enabled Payment System.

SERVICES OFFERED BY AEPS

Cash Withdrawal – Mini-ATM

Spice Money retail counters now offer the Aadhaar enabled Mini-ATM services. Now you can easily withdraw cash from your bank account without going to the bank. Go to any of the Spice Money stores and withdraw the required amount of cash by just providing your Aadhaar number, bank name and thumb/finger impression.

Cash Deposit

Now you can deposit cash by just walking into any of the Spice Money centres. All you need to do is give your Aadhaar number, bank name and thumb/finger impression. This facility is available in non-banking hours. Hence, it is easy to access at anytime.

Balance Enquiry

Spice Money retail counters also help you to check your bank balance in your accounts. Visit any of the Spice Money stores and give your Aadhaar details, bank name and fingerprint, and you will get your bank balance detail on the screen.

Payments

• When you buy something and want to make an AEPS transaction, instead of a cash or PoS payment, you will be required to punch in your Aadhaar number in a MicroATM.
•  Select your bank via the IIN
•  Press your fingers against the biometric feed on the MicroATM for your fingerprint
•  The bank account, which is linked to your Aadhaar, will be notified of your payment via the NPCI switch. It will match the details provided by the bank. If matched, your payment will be successful.

Banking activities

The NPCI is used for tracking inter-bank ATM transactions and Interbank Mobile Payment Service (IMPS). With this collaboration, you will be able to do banking activities on a MicroATM. You will be required to provide your Aadhaar details, your fingerprint and choose the linked bank via the IIN.

For cash deposits

Cash deposits here cannot be made physically. Only cash deposits can be transferred from one bank to another. You will have to approach the bank where you want the money to be deposited and then punch in your details there — your bank's IIN, the amount of cash you want to be deposited to the acquirer bank, your Aadhaar number and your fingerprint. The NPCI will notify the issuer bank and the cash will be deposited.

For Aadhaar to Aadhaar Fund Transfers

Here, apart from providing your details, you will be required to give the beneficiary's details as well. You will have to provide the beneficiary's bank details via IIN, and their Aadhaar number.

For cash withdrawal

Apart from your Aadhaar, IIN and biometric details, you will have to punch in the amount you want to withdraw. Same as in the above case, the NPCI will notify the issuer bank and you will get the amount you desire to withdraw.

Restriction

• You can only use AEPS where a MicroATM facility is available. As of now, it can only be done via Business Correspondents.
• Business Correspondents, recognised by the Reserve Bank of India (RBI), require the banks to engage with NGOs, Post Offices, Micro Finance Institutions, etc. to enable Aadhaar-related transactions.
• While you can link how many ever bank accounts to your Aadhaar, you are required to make only one as your primary account where you would receive all AEPS transactions.

BENEFITS AND DRIVERS

• Ease of payments at the doorstep instead of travelling long distances
• Minimized queuing leading to operational efficiencies at Banks
• Accurate and fast transaction/s
• Eliminating middlemen
• The interoperable system ensures that customer is not tied to one bank’s BC
• Banks do not need to invest in enabling capture of biometrics

PROBLEM AREAS AND DRAWBACKS

• Authentication failures due to failure in recognizing user fingerprints at micro ATM’s
• The existence of gaps in issuing passbooks to all account holders as per commitment, which led to users adopting traditional banking
• Irregular commission and incentive payments to business correspondents
• Banks are reluctant to step in, to position micro ATMs & go on board for AEPS due to lack of clear service-oriented goals
• Service providers are slow to adapt to new technology & requirements
• In case of an identity theft, it’s not yet clear between the 2 (bank or government) who will be responsible to solve such problem