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Aadhaar Enabled Payment System (AePS): Bridging the Financial Inclusion Gap
How to Secure Your Financial Future with Life Insurance
May 31, 2025Aadhaar Enabled Payment System (AePS): Bridging the Financial Inclusion Gap
Digital transformation has helped the banking industry not just find growth but also offer seamless services to customers. Rural areas, however, still don’t have access to even basic banking services. This is why NPCI introduced the Aadhaar Enabled Payment System (AePS) to enable a bank customer to access their specific Aadhaar-enabled bank account using their Aadhaar identity.
AePS is a bank-led model that helps customers carry out standard banking operations such as cash deposits, cash withdrawals, balance enquiries, and more. NPCI has approved over 48.97 crore transactions in April 2025 alone. Discover what is Aadhaar Enabled Payment System is and how AePS is bridging the banking financial gap in India.
What is the Aadhaar Enabled Payment System (AePS)?
AePS, or the Aadhaar Enabled Payment System, is a bank-led facility that enables individuals to make simple banking transactions with their Aadhaar number and fingerprint verification. It allows customers to carry out banking operations without debit cards, the internet, or a mobile phone.
It’s a model specially designed for individuals who are staying in rural areas or do not have bank and ATM facilities easily available nearby. With AePS, it is simple for any individual who carries an Aadhaar card that possesses a banking facility to avail of banking facilities at their nearby Aadhaar Micro ATM or by visiting a business correspondent (also referred to as a banking Mitra).
How Does AePS Work?
The Aadhaar Card Enabled Payment System uses Aadhaar as a means of identity and verification. Using Aadhaar and fingerprints to authenticate allows customers to use Micro ATMs or banking correspondents to carry out simple banking operations. Here is how an AePS works:
- You will first visit a nearby Aadhaar Micro ATM or a business correspondent (BCs).
- Now, you will inform BCs of the service you require, like cash withdrawal or balance inquiry, and provide your Aadhaar number.
- Place your finger on the biometric reader.
- If the fingerprint matches the fingerprint that is associated with your Aadhaar, you can complete the transaction.
Requirements for AePS
To complete a banking transaction via AePS, here are all the details and documents you need:
- Your Aadhaar card or number
- An Aadhaar-linked bank account
- Your fingerprint for verification
You don’t need to carry or show debit/ATM cards or online banking to withdraw cash or view your balance. That is why Aadhaar Banking is so helpful and popular in rural areas.
What Services Are Available Through AePS?
The main objective of NPCI is to make it easier for customers from rural areas to conduct basic banking operations and transactions. The NPCI achieves its objective by offering the following services through AePS:
- Cash Withdrawal: You can withdraw money from your banking account without using bank cards or cheque books. You just have to use your Aadhaar and fingerprint.
- Balance Enquiry: AePS makes it easier for you to check how much you have in your bank account.
- Mini Statement: You can view your most recent transactions with a mini statement.
- Aadhaar to Aadhaar Fund Transfer: Transfer money to another bank account associated with Aadhaar.
- Cash Deposit (only at select locations): You can deposit cash into your account through AePS.
You can carry out all these operations with Aadhaar Micro ATMs or agents operating in your neighbourhood. It eliminates the need to travel to nearby villages to withdraw cash or check one’s balance.
Why does AePS Matter for India?
60% of India’s population, which is about 89 crore, lives in rural areas. However, rural areas are home to only 36% of all bank branches. Despite making up nearly 60% of the population, rural areas in India have only 20% of the country’s ATM.
These areas have no banks or ATMs to carry out banking operations. Many customers have to travel to nearby villages just to know the balance. This is why the Aadhaar Card Enabled Payment System matters in these regions. It fills the gap virtually and brings banking to everyone’s doorstep. Here’s how AePS brings financial inclusion:
- Reaches Remote Villages: AePS operates even in far-flung villages where there are no banking institutions.
- Empower Underprivileged People: Daily wage earners and farmers can now easily withdraw their money without hassle.
- Makes Government Schemes Easy: Welfare payments such as subsidies, pensions, and MNREGA payments are now deposited into Aadhaar-linked bank accounts, which people can easily withdraw through AePS.
- No Literacy Barrier: Even customers with no literacy can use the AePS system with the assistance of their fingerprint.
Is AePS Safe and Secure?
Yes, AePS is safe and secure. It uses biometric authentication (your fingerprint) to ensure that no one can spend your money. As PINs and passwords don’t have to be input, there is very little chance of fraud or scams.
Also, your biometric information will only work for any AePS transaction if your biometric information matches what UIDAI has stored (i.e., the Aadhaar database). While AePS is itself safe, here are some tips to improve safety:
- Link your bank account to your Aadhaar.
- Visit authorised centers or stores that have certified Aadhaar Micro ATMs.
- If it’s not required, never give out your complete Aadhaar number. Don’t write it down or keep it on shared or public devices.
- AePS transactions should only be carried out with bank agents or authorised Business Correspondents (BCs). Verify if they are connected to a reputable bank or service provider.
- Don’t let unauthorized people or suspicious agents steal your fingerprint scan. Verify the biometric device’s cleanliness and proper operation.
- An OTP is not needed for AePS transactions. If someone requests your PIN, bank account details, or OTP, it could be a scam attempt.
Can AePS be used without a Debit Card or Smartphone?
This is probably the biggest benefit of the Aadhaar-based Payment System. You don’t require a mobile phone or a debit card to use AePS. This is perfect for:
- The elderly who do not have smartphones
- Villagers with no internet access or mobile coverage
- Individuals who have lost their ATM card
- Illiterate people who cannot manage PINs and passwords
- An OTP is not needed for AePS transactions. If someone requests your PIN, bank account details, or OTP, it could be a scam attempt.
Real-Life Impact of AePS
Let us consider the case of Rani Devi, a 58-year-old farmer from a village in Bihar. Her widow’s pension is credited directly into an Aadhaar-linked bank account. Previously, she would go 20 km to the nearest bank branch to withdraw cash.
Now, every week, a banking mitra visits her village with a micro ATM. Rani Devi simply needs to share her Aadhaar number and place her finger on the biometric reader. In seconds, she receives her pension in cash.
This is financial empowerment at the grassroots level. Through the Aadhaar Card Enabled Payment System, Rani Devi no longer needs to wait for someone else to bring her money.
Challenges Faced by AePS (And How They Are Being Addressed)
No system is infallible. AePS also has some challenges to address:
- Biometric Failures: Fingerprint verification at times fails due to a technical glitch or manual work. In such a scenario, other biometric modes, such as iris scans, could be used.
- Connectivity Issues: In remote locations, the device might experience connectivity problems. The government is endeavouring to strengthen this.
- Agent Availability: Not all villages have sufficient banking agents. But this is gradually changing with the advent of fintech and rural banking.
Conclusion
Aadhaar Enabled Payment System is not just a payment system but an instrument of empowerment. It makes it possible for crores of individuals to manage their money, receive government benefits, and join the financial system without any digital competence.
Whether you are a farmer in Madhya Pradesh or a daily wage earner in Odisha, AePS is changing lives and making banking simple, secure, and accessible for all. As India moves towards a digital economy, tools like AePS are working great to include every citizen, irrespective of location or income.
FAQs about the Aadhaar Card Enabled Payment System
1. What if my fingerprint doesn’t match at the AePS outlet?
Your fingerprint might not work occasionally due to dirt, dryness, or skin aging. Clean your finger and the reader. If, even after that, it does not read, approach your bank to update your biometrics.
2. Can I link multiple bank accounts to my Aadhaar for AePS?
Yes, but only one main bank account can be used for AePS transactions. If you want to switch it, you will have to change your Aadhaar-bank linking preference from your bank.
3. Can I withdraw a daily cash limit through AePS?
Yes, normally, there is a daily limit of ₹10,000 or less for AePS withdrawals. It may vary from bank to bank, so you will have to verify with your bank.
4. Do I pay a fee for AePS services when I make a transaction at a shop?
AePS transactions are usually free to customers. Some agents will, however, charge a convenience fee. Always ask for a receipt and check with your bank if in doubt.
5. What if the money is debited, but the agent does not give cash?
In rare cases, your money might get deducted, but the agent might not receive it. In this case, you don’t need to panic or worry. It generally gets reversed within 5–7 working days. Keep the transaction slip safe and notify your bank immediately.
