AEPS (Aadhaar-Enabled Payment System): What It Is & How It Works

Did you know that your Aadhaar card could be used to perform financial transactions? Thanks to AEPS, you can. Aadhaar-Enabled Payment Systems (AEPS) is a ground-breaking system that enables secure and simple digital transactions, while promoting financial inclusion and a cashless economy. By leveraging Aadhaar’s unique identification number, AEPS enables seamless banking services, ensuring efficient financial access for people in remote areas.

What is AEPS?
 

AEPS stands for Aadhaar-Enabled Payment System - a payment service launched by the National Payments Corporation of India (NPCI). It lets you use your Aadhaar number and your fingerprint to handle financial transactions—like withdrawing cash, checking your bank balance, or transferring money—without needing a debit card, smartphone, or even an internet connection.

Bank customers can avail basic banking services using their Aadhaar numbers combined with biometric authentication. The system does not require the use of old banking cards or signatures, which makes the transactions very accessible and secure.

How does AEPS work?
 

Picture this: You walk up to a tiny shop or a banking agent with a little machine (called a micro-ATM). You give them your Aadhaar number, press your finger on a scanner—beep boop beep—and voilà! The system checks your fingerprint against the Aadhaar database, confirms your identity, and lets you grab cash or transfer money to another account. Fast, simple and secure.

A customer needs to link his bank account with his Aadhaar number to avail of AEPS. Such transactions are possible through banking correspondents or micro-ATMs that are equipped with biometric scanners. The process includes the following steps:

• Authentication: The customer provides his Aadhaar number and undergoes biometric authentication.
• Transaction selection: It chooses the type of transaction, such as cash withdrawal, deposit, balance enquiry, or fund transfer.
• Processing: The system verifies the credentials and processes the transaction in real time.

Advantages of AEPS
 

AEPS is a game-changer for people in remote villages or for anyone who doesn’t trust fancy apps. No need to carry wads of cash or remember PINs—just your finger and your Aadhaar number, and you’re good to go. Plus, it’s backed by the government and banks, so it’s safe and reliable.

• Financial inclusion: It allows you to use banking services without the physical presence of any bank branch.
• Ease of use: Transactions can be made with biometric validation only. No debit card or PIN is required.
• Secure: Biometric authentication ensures that transactions are properly secured; thus, reducing fraud.
• Interoperability: It will allow the customer to access his bank account from any AEPS-enabled micro-ATM, irrespective of the bank.

AEPS debit facility
 

The debit facility under the AEPS scheme will allow customers to withdraw money from their bank accounts through micro-ATMs operated by banking correspondents. This facility will be highly beneficial in places where the ATM infrastructure is lacking. In such locations, people can withdraw their money at any time.

Use AEPS with IDFC FIRST Bank Savings Account
 

For a seamless banking experience, AEPS needs to be integrated with a digital savings account. IDFC FIRST Bank’s digital savings account offers a rich set of features that complement services offered by AEPS:

• High-interest rates and monthly interest credits: Earn one of the most competitive interest rates in the country on your savings and get it credited to your account every month, so that your money grows quickly.
• Zero-fee banking: Enjoy zero fees on all savings account services, ensuring cost-effective and transparent banking.
• Free and unlimited ATM withdrawals: Withdraw your money anywhere without any charges or limits on ATM withdrawals from any bank across the country.
• Easy account opening: Open an account online using a completely contactless process, including video KYC, from the comfort of your home.

Conclusion
 

The Aadhaar-enabled payment system is changing the way people access banking services, especially in underserved regions. AEPS, combined with IDFC FIRST Bank’s savings account, provides customers with a comprehensive banking experience that is secure, convenient, and rewarding. Make the most of these innovative services to manage your finances effectively.