AEPS is a modern transaction system which brings banks to the remote areas where people don’t have a smartphone and not comfortable with the digital transaction. This is the only transaction system which also gives cash. In this technology, your fingerprint or iris image is used for the authentication. This system requires a micro-ATM and an operator which can be a banking correspondent or merchant.
Full Form And Meaning of AEPS
AEPS stands for the Aadhaar Enabled Payment System. Since this system uses your Aadhaar data for the transaction and authentication, It is called as the Aadhaar Enabled Payment System. Other payment systems such as UPI and IMPS uses the mobile number for the transaction. Since this system works on Aadhaar data, Mobile number registration or smartphone app is not necessary. Although the banking correspondent requires a handheld machine and internet connection both.
Because of AEPS e you can do banking without any phone or internet. Even you don’t need to remember the PIN. Rather, it uses Aadhaar data for the authentication. Like UPI and USSD, this is another initiative by the NPCI.
Benefits of Aadhaar Enabled Payment System
- You can Pay money, deposit amount, get mini statement and check balance.
- AEPS works with Micro-ATM. This handheld ATM can go anywhere.
- A banking correspondent of any bank can do the specified transaction of any bank.
- There is no need of signature or debit card.
- It is fast and secure. No one can forge your fingerprint.
- Banking correspondent can reach to the distant rural place with the micro POS.
- Shopkeepers can also use AEPS to take payments
Transactions Through the AEPS
The Aadhaar Enabled Payment System gives you banking facility on the go. However, It gives you only basic services. These 5 services can be done through the AEPS.
- Balance Check
- Cash Deposit
- Cash Withdrawal
- Mini Statment
- Aadhaar to Aadhaar Fund Transfer
The Aadhaar to Aadhaar fund transfer mechanism is used for the Merchant payment. A shopkeeper can use the dedicated app for this purpose.
Except for Fund transfer, you can perform all the transactions through the banking correspondent of any bank. For fund transfer, you need the BC of your own bank.
Requirements for AEPS
Through the Aadhaar Enabled Payment System (AEPS), you can get money without producing any paper or card. However, your Aadhaar number should be registered with your bank account. If you did not link your Aadhaar with a bank account the Aadhaar Enabled Payment System would not be useful to you. For AEPS transaction, you need the following information.
- Aadhaar Number
- Bank IIN or Name
It means you have to only remember your Aadhaar number to do the bank transaction. It is just like remembering own mobile number.
What is IIN in AEPS
IIN Stands for the Issuer Identification Number. The NPCI issues this 6 digit number to those banks which participates in AEPS. The AEPS system recognises a bank on the basis of the IIN.
For a fund transaction, the Aadhaar number and IIN are required. Since an Aadhaar number can be linked to various bank account number the IIN differentiates among them as different banks would have different IIN. There is only one IIN for a bank irrespective of the branch. Such as the IIN for the SBI is 607094.
The IIN coupled with Aadhaar number will uniquely link to an Aadhaar enabled bank
account with that Bank. Alternatively, instead of entering the digits for IIN, it may be
represented at the MicroATM level by the respective banks’ name/ logo, which may be
selected from a drop-down menu.
Upon successful Aadhaar Authentication, the bank debits the Aadhaar enabled the account of the initiating customer and sends a Payment Request to the Beneficiary’s Bank based on the IIN through the NPCI Switch.
IIN of Major Banks
|Airtel Payments Bank Limited||990288|
|Bank of Baroda||606985|
|BANDHAN BANK LIMITED||508753|
|Bank Of India||508505|
|Central Bank of India||607115|
|HDFC Bank Ltd||607152|
|ICICI Bank Ltd||508534|
|IDFC Bank Limited||608117|
|Indian Overseas Bank||508541|
|The Jammu And Kashmir Bank Ltd||607440|
|Kotak Mahindra Bank Ltd||607420|
|Bank of Maharashtra||607387|
|Oriental Bank of Commerce||508585|
|Punjab National Bank||508568|
|State Bank of India||508548|
|Union Bank of India||508500|
|United Bank of India||607028|
Why Aadhaar for Authentication
Remember, at the time of Aadhaar enrolment, your fingerprints and iris image were taken. These biometric data gets linked to the given Aadhaar number. These biometric data is unique to a person. No two person have the same iris image or fingerprints.
Thus, your Aadhaar number can be verified by your finger prints. This biometric authentication makes Aadhaar the perfect proof for the banking transactions. Indeed, It has replaced the signature.
How Aadhaar Authentication Works
Suppose, you claim to be Vijay and produce the Aadhaar number of Vijay. To verify it, bank official would take your fingerprints in a machine. The machine gives the fingerprint details to Aadhaar Payment app. The app immediately tallies your fingerprints with the fingerprints of the given Aadhaar. If it matches, the system would permit for the transaction. In case of mismatch, the system would not do any transaction.
How Aadhaar Enabled Payment System Works
It is surprising that only through the Aadhaar number you can access your bank account. But it is possible because the Aadhaar is linked to your bank account. This linking leads you to your bank account.
The fingerprint is authenticated by the UIDAI. In response to a transaction, UIDAI tells to the bank about the authenticity of the user. Once, UIDAI authenticates, the bank gives a green signal to the transaction.
Thus, in the Aadhaar Enabled Payment System 6 institutions are involved.
- You, the bank customer
- Banking correspondent or merchant – The facilitator of AEPS
- The bank of BC – The bank to which banking correspondent or merchant is attached
- Your Bank – the bank with which you held the bank account
- NPCI – It does switching, clearing and settlement of transactions
- UIDAI – For finger-print authentication
Charges of AEPS
Unlike UPI, the AEPS is a relatively costly transaction. It can go up to Rs 15 for one transaction. On the other hand, UPI charge is free to nominal. For AEPS, three institutions involved can charge fees.
- UIDAI may charge a nominal fee for authentication, however, it is not charging yet.
- The NPCI charges 10 paise for authentication and 25 paise for settlement.
- The bank can charge 1% of the transaction value if it is related to other banks. The minimum fees for other bank transaction would be Rs 5 and maximum fees would be Rs 15.
However, the union government would bear the cost of AEPS payment until 31 December 2019. It is subsidizing debit card, UPI and AEPS MDR charge. So as of Now, the AEPS transaction is free.
Also Read: Convenience of Samsung Pay
AEPS gives a lot of convenience to the rural people. It brings the bank to their doorstep and saves much time and transport expense. It would be just like a visit of the ATM at every doorstep. That is why government calls the POS as micro ATM.
Recently, the government has launched the BHIM Aadhaar Pay system. It has the virtues of BHIM app as well as AEPS. Using this platform, one can pay to the merchant without the card or mobile. The thumb impression is used for authentication.