INTRODUCTION

Financial inclusion is expected to be key application of aadhaar authentication adoption of

aadhaar and aadhaar authentication in Indian Banking System is expected to change the financial
landscape of country.

The government is planning to utilizes the aadhaar data base to give shape to a digital future and
utilizes it for payment and authentication of transaction is the key to its success while unified
payments Interface and Bhim (Bharat Interface for money) are processes for per to per
transactions using smartphones, the government is promoting aadhaar enabled payment system
for the government is promoting aadhaar enabled payment system for the non-smart phone
survey.

Aadhaar Payments Bridge (APB) – A system that facilitates seamless transfer of all welfare
scheme payments to beneficiary residents' Aadhaar Enabled Bank Account (AEBA)

Aadhaar Enabled Payment System (AEPS) – A system that leverages Aadhaar online
authentication and enables AEBAs to be operated in anytime-anywhere banking mode by the
marginalized d financially excluded segments of society through micro ATMs

Who run the system?

National Payment Corporation of India (NPTC) is the module authoring of all aadhaar enable
payment in collection with banks. The payment company is trying to get a many bank to seed
their customer’s accounts with their aadhaar number so the payment can flour smoothly.
BENEFITS

 You can perform financial and non-financial transaction through the banking
correspondent.

 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.

 The aadhaar unable payment system facilities inter-operability between bank in safe and
secure manner

 The aadhaar unable payment system allows customers to carry out basic banking
activities without having to furnish sensitive bank account details.
TRANSACTION THROUGH THE AEPS

The aadhaar enable payment system gives you banking facility on the go. However, It give you
only basic services can be done through the AEPS

Cash Deposit

Now you can deposit cash by just walking into any of the Spice Money centres. All you need to
do is give your Aadhaar number, bank name and thumb/finger impression. This facility is
available in non-banking hours. Hence, it is easy to access at anytime.

Balance Enquiry

Spice Money retail counters also help you to check your bank balance in your accounts. Visit
any of the Spice Money stores and give your Aadhaar details, bank name and fingerprint, and
you will get your bank balance detail on the screen.

Cash Withdrawal – Mini-ATM

Spice Money retail counters now offer the Aadhaar enabled Mini-ATM services. Now you can
easily withdraw cash from your bank account without going to the bank.
OBJECTIVES

To promote the use of the aadhaar card as a identification to perform basic banking activities
such as balance enquiry, cash deposits, cash withdrawal and other remittances that are either
interbank or intrabank in nature.

To increase the financial inclusion of in divided in the country.

To route aadhaar initiated interbank transaction through a clearing or switching agency.

To use the aadhaar as identification for disbursement of government entitlement, such as the
National Rural employment guarantee (NREGA), social security pension handicapped and old
age pension etc.
REQUIREMENTS OF AEPS

Through the aadhaar enabled payment system you can get money without produsing any paper or
card. However, your aadhaar number should be registered with bank account. If you did not
linked your aadhaar with bank account the aadhaar enable payment system would not be useful
to you. For AEPS transaction you need following information: -

1. Aadhaar number
2. Bank IIN or Name
3. Fingerprint

It means you have to only member your aadhaar number to do the bank transaction. It is justr
like remembering own mobile number.
Charges of Aadhaar Enable Payment System

Unlike UPI, the AEPS is a relatively costly transaction. It can go upto Rs 15 for one transaction.
On the other hand UPI charge is free to nominal. For AEPS, three institution 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 bank. The minimum
fess 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
Decmeber 2019.

How Aadhaar Enabled Payment System Works

It 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 green
signal to the transaction.

Thus, in the Aadhaar Enabled Payment System 6 institutions are involved.

1. You, the bank customer

2. Banking correspondent – The facilitator of AEPS

3. The bank of BC – The bank to which banking correspondent is attached

4. Your Bank – the bank with which you held the bank account

5. NPCI – It does switching, clearing and settlement of transactions

6. UIDAI – For finger-print authentication

Risks of Aadhaar Enable Payment System

The AEPS is based on the following premises

1. An existing account number and IFSC code that inquiry indentifies a branch
of any bank are not sufficient to do a legitimate transaction.
2. An account not linked with an aadhaar number lacks the KYC or may bio
fake account.
3. An account linked with an aadhaar number is genuine and cannot be a fake
one.
4. Anditability of aadhaar number bank transfer is identical to an account
number to account number transfer.
5. The cost of AEPS are less than the costs of NEFT or RTGS.

Pros: -

It is very easy way of cashless transaction now central Government has lunched the
app aadhaar pay.

Charges of AEPS

Unlike UPI, the AEPS is a relatively costly transaction. It can go upto Rs 15 for one transaction.
On the other hand UPI charge is free to nominal. For AEPS, three institution involved can charge
fees.

 UIDAI may charge a nominal fees 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 bank. The minimum
fess for other bank transaction would be Rs 5 and maximum fees would be Rs 15.
Conclusion

AEPS may be costly than UPI and USSD but it gives a lot of convenience to the rural people. It
would bring bank to their doorstep and save much time and transport expense. It would be just
like a visit of ATM at every doorstep. That is why government calls the POS as micro ATM.

Recently, 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 merchant without the card or mobile.
The thumb impression is used for authentication.