RBI streamlines process of onboarding AePS Service Providers

Context: Amid increasing instances of fraud related to the Aadhaar-enabled payment system (AePS), the Reserve Bank of India (RBI) has proposed to streamline the process of onboarding AePS service providers.

The central bank is also planning to introduce additional fraud risk management measures for AePS. 

Aadhar-enabled Payment System (AePS)

• AePS, or Aadhaar enabled Payment System, is a payment system that enables customers to carry out financial transactions through Aadhaar-based authentication at Point of Sale (PoS) devices and micro ATMs.
• Aadhaar is a unique identification number containing demographic and biometric data issued to Indian residents. 
• National Payments Corporation of India (NPCI) introduced AePS system to promote financial inclusion and make banking services accessible to all, particularly those living in remote and rural areas.
• Maximum limit of Rs. 10,000 on a single transaction. But, the overall limit is set by respective banks.
• Monthly transaction limit of Rs 50,000 on a 30 day rolling basis.

Banking Services Offered by AePS

• Cash Deposit
• Cash Withdrawal
• Balance Enquiry
• Mini Statement
• Aadhaar to Aadhaar Fund Transfer
• Authentication
• BHIM Aadhaar Pay

Benefits of AePS:

• Financial inclusion: AePS enables individuals who do not have access to traditional banking services to carry out financial transactions. This promotes financial inclusion and ensures that everyone has access to basic banking services. 
• Streamlining Government Entitlements: Aadhaar enabled Payment System facilitate disbursements of Government entitlements like NREGA, Social Security pension, Handicapped Old Age Pension etc. of any Central or State Government bodies using Aadhaar authentication.
• Convenience: AePS allows users to carry out financial transactions using their Aadhaar number and biometric authentication. It eliminates the need for carrying cash or a physical debit card, making transactions more convenient and hassle-free. 
• Security: Since transactions on AePS are authenticated using biometric authentication, it is more secure than traditional banking services that rely on passwords and PINs. It ensures that transactions are safe and secure. 
• Low-cost transactions: AePS transactions are low-cost, making it an affordable option for individuals who want to carry out financial transactions. 
• Easy to use: AePS is easy to use and does not require any special training or knowledge. Users can carry out transactions using their Aadhaar number and biometric authentication, which is a simple and straightforward process.
• Inter-operability: Aadhaar enabled Payment System facilitates inter-operability across banks in a safe and secured manner.
• Reaching the unreached: The model enable banks to extend financial services to the unreached clients beyond their branch network as beneficiaries of the Business Correspondents (BCs) are mostly located at unbanked and underbanked areas.