Aadhaar-enabled payment system
Also called: AEPS · Topic: Payment Systems and Digital Finance · NCERT: Class 12, Ch 3 "Money and Banking"
Meaning
The Aadhaar-enabled Payment System (AePS) is a system run by the National Payments Corporation of India (NPCI). It lets a person do basic banking with just their Aadhaar number and their fingerprint or iris scan. They need no debit card, no PIN and no trip to a branch. The services are cash withdrawal, cash deposit, balance enquiry and fund transfer. They are offered at micro-ATMs (small handheld card-and-fingerprint machines) or by business correspondents (village-level agents who work for a bank). AePS is one of the payment rails built on the JAM trinity (Jan Dhan + Aadhaar + Mobile). It matters for financial inclusion, because it brings banking to villages that have no bank branch or ATM. Its main risk is fraud using cloned or silicone fingerprints copied from land and property records. The safeguards are fingerprint liveness checks, face authentication and the option to lock your Aadhaar biometrics on UIDAI's website.
Example
A woman in a village receives a DBT subsidy (Direct Benefit Transfer) in her Jan Dhan account. She visits the local business correspondent, gives her Aadhaar number and places her finger on the micro-ATM. She then takes out the cash she needs, without a card or a PIN.
Don't confuse with
- Aadhaar Payment Bridge (APB): APB sends government DBT money into the bank account linked to a person's Aadhaar. AePS is what the person uses to withdraw or use the money in that account.
- UPI: UPI checks who you are through device binding (your phone and SIM are tied to your account) plus a UPI PIN. AePS uses your Aadhaar number plus a biometric scan, so it works even for people without a smartphone.