What is Aadhaar Enabled Payment System (AEPS) & How it Works?

Aadhaar is evolving as one of the highest forms of ID proof for Indian citizens. Here, the Aadhaar-enabled payment system (AePS) helps to ensure high-end financial and banking services through Aadhaar. It is a great way to make payments, transfer funds, deposit cash, withdraw money, enquire about bank balances, etc.

Are you curious to know more about the Aadhaar enabled payment system (AePS)? Find out all about it from this article.

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What Are the Objectives of the Aadhaar Enabled Payment System?

It is essential to learn the objectives of the AePS service to understand its benefits and effectiveness. Here are its main objectives:

To meet the policies and goals related to the Reserve Bank of India (RBI) and the Central Government of India related to the financial requirements.
To help Indian citizens use Aadhaar as ID proof for essential financial transactions and activities.
To establish a central system for Aadhaar-initiated interbank transactions.
To develop a safe and secure way of interoperability across banks.
To enable the Indian government to disburse funds through Aadhaar for schemes like NREGA, social security pension, etc.

How Does AePS Work?

The AePS payment system works like a Point of Sale (POS) machine. The only difference is that instead of a debit/credit card pin, this system requires the Aadhaar number of the user. Moreover, the user's biometric data is also needed here to authenticate the entire transaction.

The Issuer Identification Number (IIN) of your bank can also be required in this process. Hence, for this kind of payment system, you need to offer your bank's name or IIN and Aadhaar number beside your biometric details.

How to Use an Aadhaar Enabled Payment System?

Now, you must be wondering about the ways to use an Aadhaar-based payment system. You can go through the following steps to use this system.

Step 1: Visit a local banking correspondent or a micro ATM in your locality. Keep your Aadhaar card with you.

Step 2: Enter your Aadhaar number in the PoS machine. Next, enter the bank name after selecting the transaction type.

Step 3: Enter your transaction amount here. Provide our biometrics through fingerprints to confirm the transaction.

Step 4: Collect the receipt after completing the transaction.

What Are the Services Offered by the Aadhar Enabled Payment System?

Here are the services that the Aadhar card-enabled payment system helps you enjoy in terms of financial transactions.

Banking Services

Cash Deposit
Bank Balance Enquiry
Cash Withdrawal
Easy Fund Transfer
Financial Authentication
Mini Statement Generation
BHIM Aadhaar Pay

Other Services

e-KYC
Aadhaar Seeding Status
Biometric Detection
Demo Auth
Tokenisation

What Are the Features of the Aadhar Enabled Payment System?

Now that you know how to use AePS payment, knowing about its features will be beneficial for you to know more about it. Here are some of its features.

It is a form of conducting financial transactions using the Aadhaar details.
Only Aadhaar-linked bank accounts can utilise the benefits of this kind of payment system.
A banking correspondent is essential for conducting basic transactions like cash transfers, withdrawals and deposits.
This payment system needs the user's biometric details to authenticate and confirm a transaction.

Things to Keep in Mind before Opting for AePS

You should keep the following factors in mind before going for AePS: .

You cannot complete an AePS without a PIN or OTP.
If you have multiple bank accounts linked to your Aadhaar, only the primary account will be utilised during an AePS.
Only the Aadhaar holder can get this facility, as it requires live biometrics.

Therefore, the Aadhaar-enabled payment system is favourable for hassle-free financial transactions. As this article pointed out, conducting this system is quite simple and user-friendly. However, to utilise this facility, you must link your bank account with your Aadhaar card to utilise this facility.

FAQs About Aadhaar Enabled Payment System

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Is there a fund limitation in AePS?

RBI has not imposed any limitation to fund transfers in AEPS. However, few banks often restrict daily transactions and do not allow transactions over ₹ 50,000 a day through AEPS.

What are the charges for AePS?

Fortunately, there are no charges for AePS as of now. However, it can be chargeable in the future, up to ₹ 15 per transaction. Banks are likely to charge 1% of the transaction from the user, a minimum being ₹ 5 and a maximum being ₹ 15.

What is an ON-US and OFF-US transaction?

During an ON-US transaction, the transactions do not require an interbank settlement as it affects only accounts within a single bank account. Whereas, in an OFF-US transaction, funds are transferred from the accounts of one bank to another.