How Aadhaar Enabled Payment System (AEPS) Works; A Complete Guide - chaprama | Insights from the world of Technology and Lifestyle


Saturday, December 17, 2016

How Aadhaar Enabled Payment System (AEPS) Works; A Complete Guide

In order to give a big push for cashless transactions, Government is all set to roll out the Aadhaar enabled payment system (AEPS) which is an android based application.


The app is developed by UIDAI in collaboration with TCS. The app can be downloaded by the merchants who has a smartphone and a fingerprint scanning machine with them. This payment system does not require any card for making the transaction. The payment system utilizes fingerprint to authenticate the identity. Also, the system does not require the pin.

The decision to roll out the Aadhaar enabled payment system has been taken by the chief minister's committee headed by the AP chief minister Nara Chandrababu Naidu. The panel in its report submitted to Union finance ministry also suggested to roll out a user-friendly USSD system *99#. It is said that the upgraded version of USSD would be rolled out on 25 December.

How Aadhaar enabled payment system works?

The only inputs required for a customer to do a transaction are:

  1. IIN (Identifying the Bank to which the customer is associated).
  2. Aadhaar Number
  3. Fingerprint captured during their enrollment.

The features of AEPS that people can utilize are:

  1. Balance Enquiry
  2. Cash Withdrawal
  3. Cash Deposit
  4. Aadhaar to Aadhaar Funds Transfer

1. What is AEPS?

AEPS is a new payment system offered by the National Payments Corporation of India to banks

2. What is Aadhaar?

Aadhaar is a unique identification number issued by the Unique Identification Authority of India (UIDAI) to any resident of India.

3. Can any customer be a part of AEPS?

Any resident of India holding an Aadhaar number and having a bank account can be a part of the Aadhaar Enabled Payment System.

4. Does the customer need to have a bank account for availing AEPS?

Yes, the customer needs to have a bank account for availing AEPS.

5. Does the customer specifically need to register to conduct transactions through AEPS?

No. Customer should have an Aadhaar (Unique ID as issued by UIDAI) number linked with any bank account (bank should be a part of AEPS network) where customer has an account. The registration process shall be as per the procedures laid down by the bank providing AEPS service.

6. Is the beneficiary customer also required to register for AEPS?

No. But the beneficiary customer must also have an Aadhaar (UID) number with any bank, with
which they maintain an account (bank should be a part of AEPS network) and in which he intends
to receive the credit.

7. What is a Business Correspondent (BC)?

Business Correspondent (BC) is an approved Bank Agent providing basic banking service using a
MicroATM (terminal) to any bank customer wishing to avail their bank BC service.

8. Which individuals/ entities could be a business correspondent?

The following individuals/ entities are eligible to become a business correspondent:

a. Individuals like retired bank employees, retired teachers, retired government employees and ex-servicemen, individual owners of kirana/ medical/ Fair Price shops, individual Public Call Office (PCO) operators, agents of Small Savings schemes of Government of India/ Insurance Companies, individuals who own Petrol Pumps, authorized functionaries of well-run Self Help Groups (SHGs) which are linked to banks, any other individual including those operating Common Service Centres (CSCs);

b. NGOs/ Micro Finance Institutions (MFIs) set up under Societies/ Trust Acts and Section 25 Companies

c. Cooperative Societies registered under Mutually Aided Cooperative Societies Acts/ Cooperative
Societies Acts of States/ Multi State Cooperative Societies Act;

How does the customer conduct an AEPS transaction? 

A Customer may visit a BC Customer Access Point. The BC using the Point of Sale (MicroATM) device will be able to process transactions like Cash Withdrawal, Cash Deposit, Balance Enquiry and Fund Transfer by selecting the transaction of their choice. The Customer needs to provide their Aadhaar Number and their bank name or bank IIN number.

10. What is an IIN? 

This number identifies your Bank with which you have mapped your Aadhaar number. IIN is a six digit number. In most banks BC customer service points, this number would be represented on the terminal by the banks logo or name. The BC agent would also have a chart displayed of various banks IIN. Therefore, this input need not be remembered by the customer. It is, however, recommended that the customer be aware of their bank IIN to ensure a successful AEPS transaction.


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