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  • Writer's pictureVivek Singh

How Aadhaar Enabled Payment System (AEPS) is Revolutionizing Banking in India?

The acronym is "Aadhaar Enabled Payment System". This safe, immediate payment system allows users to do transactions like cash withdrawals, deposits, balance inquiries, and funds transfers using their Aadhaar number and biometric authentication. The system's operator, the National Payments Corporation of India (NPCI), is particularly interested in providing financial services to people living in rural and remote regions of the country who do not have easy access to traditional banking services.

@ImageCopyright: NPCI

The Aadhar Enabled Payment System (AEPS) functions as follows:

  • For authentication, the customer provides the micro-ATM or a banking employee with their Aadhaar number and biometric information (fingerprint or iris scan).

  • Inquiry regarding a transaction: The customer selects the type of transaction they wish to carry out, such a withdrawal of money, a deposit, or a balance inquiry.

  • Authorization: To authenticate the transaction request and the user's biometric information, the micro-ATM makes communication with the Aadhaar authentication server.

  • Transaction processing: The bank conducts the transaction and debits or credits the customer's account with the appropriate amount after the authentication is successful.

  • Confirmation: In addition to saving the user's biometric information for future usage, the micro-ATM provides the user with a receipt attesting to the transaction.

  • AEPS provides clients, especially those in rural and distant areas of India, with real-time, secure financial transactions by utilizing the Aadhaar database and biometric authentication technologies.

What is AEPS Cash withdrawal:

@ImageCopyright: NPCI

The steps involved in making a bank account withdrawal using the Aadhar Enabled Payment AEPS cash withdrawal is what the system is known as (AEPS). Customers can use their Aadhaar number and biometric authentication to undertake a multitude of banking transactions, including cash withdrawals, using AEPS.

To withdraw money via AEPS, the customer needs to provide their Aadhaar number and biometric information (fingerprint or iris scan) to the banking correspondent or the micro-ATM. If the authentication is successful, the customer can choose how much cash they want to withdraw, and the bank will carry out the transaction in real-time. After that, the customer can pick up the cash from the banker.

AEPS cash withdrawal will be especially useful ATMs or banking services for those in rural areas who may not have easy access to normal cash withdrawal options. Customersusers use it to take cash from their accounts without an actual ATM card in a safe and secure manner.

How AEPS distribution networks work:

@ImageCopyright: NPCI

The AEPS (Aadhaar Enabled Payment System) distribution network uses the banking correspondents (BCs) network, which consists of people whose banks have authorised them to provide financial services to customers in India's remote and rural areas. Typically, the distribution network runs as follows:

The bank selects and engages banking correspondents who are responsible with conducting banking transactions on the bank's behalf in various remote and rural locations.

The micro-ATMs, which are portable computers that let consumers perform financial transactions using their Aadhaar numbers and biometric authentication, are installed by the banking correspondents in their locations.

Consumers utilize their biometrics (fingerprint) and Aadhaar numbers or iris scan) to execute the required transaction at the micro-ATM.

The tiny ATM transmits the request for the transaction to the bank's computers, where the bank processes and approves it.

A receipt is given to the customer by the micro-ATM as soon as the transaction is complete in real time. The commission from transactions made via their micro-ATM is the banking correspondent's source of income.

The AEPS distribution network allows customers in remote and rural areas to get financial services without having to travel far to a bank branch or ATM. Also, it gives banking correspondents job chances by enabling banks to supply financial services to a larger consumer base.

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