How Aadhaar Enabled Payment System works?

Aadhaar Enabled Payment System (AEPS) is a payment service that enables bank customers to carry out basic banking transactions using their Aadhaar number and biometric authentication. Here’s how AEPS works:

  1. Authentication: The customer initiates a transaction by providing their Aadhaar number to the merchant or the bank. The bank then sends an authentication request to the Unique Identification Authority of India (UIDAI), which verifies the customer’s biometric details and Aadhaar number.

  2. Transaction Request: Once the customer’s identity is verified, the bank sends a transaction request to the NPCI, which then routes the request to the customer’s bank.

  3. Transaction Processing: The bank processes the transaction request and carries out the requested transaction, such as cash withdrawal, balance inquiry, or fund transfer.

  4. Confirmation: After the transaction is completed, the bank sends a confirmation message to the NPCI, which then relays the message back to the customer and the merchant.

The AEPS service is available to customers through bank branches, business correspondents, and ATMs. Customers can use the service by providing their Aadhaar number and authenticating their identity using biometric authentication such as fingerprint or iris scan. The AEPS service is a secure and convenient way for customers to carry out banking transactions, especially in areas where traditional banking services are not easily accessible.

To use AEPS, customers need to link their Aadhaar number with their bank account, and the bank needs to be a member of the NPCI’s AEPS network. The service is free of cost for customers, and the transaction limit for AEPS is Rs. 10,000 per day, which is subject to change based on the bank’s discretion.


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