Aadhaar Enabled Payment System: Features and how to use explained
Aadhaar Enabled Payment System (AePS) is a type of digital payment method based on the Unique Identification Number (UIN). It allows Aadhaar card holders to conduct financial transactions via Aadhaar-based authentication. AePS empowers all sections of society by making financial and banking services accessible to everyone through Aadhaar. It allows the seamless transfer of funds, cash deposits, withdrawals, inquiries about bank balances, and more.
Why does this story matter?
India's unwavering shift to digital payments is evidence of its progress toward becoming a cashless economy. During the fiscal year 2021-2022, the number of digital payments in India increased by 33% year-over-year (YoY). Nearly 7,422 crore digital transactions took place during this time. Cashless India is a flagship program of the Indian Government and it includes payment methods like Aadhaar Enabled Payment System (AePS).
What is AePS?
AePS is a secure service via which customers can make financial transactions by simply providing Aadhaar verification at point of sale (PoS) or micro ATMs. The AePS machine requires the customer's Aadhaar and biometrics, instead of their debit/credit card details. Hence, having Aadhaar linked to the bank account is mandatory. With AePS, users can avail cash withdrawals/deposits, bank balance inquiries, Aadhaar-to-Aadhaar fund transfers, etc.
What are the objectives of AePS?
AePS was announced by the Reserve Bank of India with the aid of the National Payments Corporation of India. The goal is to make basic banking services accessible to people from every section of society from rural areas with no banks/ATMs to urban/semi-urban regions where reaching a bank/ATM is often challenging. A sizable Indian population now uses AePS to avail banking services.
How to use this digital payment method?
AePS allows you to digitally transfer money to Aadhaar-linked bank accounts, deposit cash, check balance, and more. Customers don't need to visit a bank for transfers, instead, a Business Correspondent (Bank Mitra) assists them in transactions via micro ATMs. Simply head to the banking correspondent, provide your Aadhaar number and bank name, choose the type of transaction, provide biometric verification, and collect your receipt.
The AePS system helps in disbursement of government scheme funds
The AePS service is a safe, secure, and user-friendly method of digital payment. Interoperable across multiple banks, this system promotes financial inclusion and benefits the underbanked sections of society. All users need to have is an Aadhaar-linked bank account. In addition to availing banking services, AePS facilitates disbursements of the government's welfare schemes such as NREGA, social security pension, and old age/handicapped pension.
