Aadhaar Enabled Payment System (AePS) [UPSC Notes]

The Aadhaar-Enabled Payment System (AePS) has been in the news lately, even as it is alleged that gaps in this system are being used by cybercriminals to syphon money from users’ bank accounts. In this article, we explain what is the Aadhaar-Enabled Payment System (AePS), what are its benefits and other details for the IAS exam Indian economy segment.

Aadhaar Enabled Payment System (AePS)

Aadhaar-enabled Payment Services (AePS) is a bank-led model which allows online financial transactions at Point-of-Sale (PoS) and Micro ATMs through the business correspondent of any bank using Aadhaar authentication. 

• The model removes the need for OTPs, bank account details, and other financial details. It allows fund transfers using only the bank name, Aadhaar number, and fingerprint captured during Aadhaar enrolment, according to the National Payments Corporation of India (NCPI).

Are AePS transactions enabled by default?

• Neither the Unique Identification Authority of India (UIDAI) nor NPCI mentions clearly whether AePS is enabled by default. 
• Cashless India, a website managed and run by MeitY, says the service does not require any activation, with the only requirement being that the user’s bank account should be linked with their Aadhaar number.
• Users who wish to receive any benefit or subsidy under schemes notified under section 7 of the Aadhaar Act, have to mandatorily submit their Aadhaar number to the banking service provider, according to UIDAI. 
• Aadhaar is also the preferred method of KYC for banking institutions, thus enabling AePS by default for most bank account holders.

How do you secure your Aadhaar biometric information?

• The UIDAI is proposing an amendment to the Aadhaar (Sharing of Information) Regulations, 2016, which will require entities in possession of an Aadhaar number to not share details unless the Aadhaar numbers have been redacted or blacked out through appropriate means, both in print and electronic form.
• The UIDAI has also implemented a new two-factor authentication mechanism that uses a machine-learning-based security system, combining finger minutiae and finger image capture to check the liveness of a fingerprint.
• Users are also advised to ensure that they lock their Aadhaar information by visiting the UIDAI website or using the mobile app. 
  • This will ensure that their biometric information, even if compromised, cannot be used to initiate financial transactions. Aadhaar can be unlocked when the need for biometric authentication arises, such as for property registration and passport renewals, after which it can again be locked.

How do you lock Aadhaar online?

• Aadhaar cards can be locked using the UIDAI website to generate a 16-digit VID number via SMS service. 
• Users can also lock their Aadhaar biometric information using the My Aadhaar tab on the UIDAI website.

Cyber fraud must be minimised in order to reap the full advantage of digital India and to restore the belief of the people in the digital ecosystem. 

Aadhaar Enabled Payment System (AePS):- Download PDF Here