Banks are always on the lookout for innovative ways to make payments, reduce expenses and provide convenience to their customers through compliance and security. Financial institutions also look for customer friendly and secure payment solutions to safeguard themselves from fraudulent transactions. An example of such a solution is the Aadhaar Number Enabled Payment System, abbreviated as AEPS. The government of India is promoting this form of payment to encourage the use of digital payments rather than cash transactions. It is particularly suited for people who are uncomfortable with using mobile wallets or cards for payments. In this form of payment, biometrics and the Aadhaar number are used to authenticate transactions, instead of plastic cards or mobile phones.
AEPS requires clients to link their bank accounts to Aadhaar. Aadhaar is utilized as an identity to access the account and carry out banking transactions. When customers choose to use this facility, they do not have to carry their cards or remember/use the PIN. All that is needed to carry out the transaction is their thumb impression.
Consumers can carry out several transactions using AEPS. They include:
- Depositing and withdrawing cash
- Transferring funds
- Inquiring about the balance available in their accounts
Both customers and merchants benefit from using AEPS.
Advantages for customers
- Biometric authentication makes the transactions secure and safe.
- No need to use a PIN or card to perform the transactions.
- The Aadhaar card does not have an expiry date. It has lifetime validity.
- Customers do not need to have smartphones or other devices which feature the latest technology.
Advantages for merchants
- Nominal charges or free.
- Cost effective for merchants who do business in the rural areas.
- Cashless transactions
- Portable point of sale system
- IMPS transfer makes it possible for the merchants to receive funds instantly.
Making Aadhaar based payment transactions is simpler and more secure than using cards to carry out PIN based transactions. The reason for this is that Aadhaar is an identity for citizens that the Government of India issued. This solution eliminates the need for financial institutions to issue a PIN or card. This results in reduced costs of making transactions and a reduction of fraudulent activities. Merchants and customers are required to use link their bank accounts with the Aadhaar number.
One of the best Aadhaar based solutions you can use is FinAEPS. This is an online, immediate payment solution that interfaces with the National Payments Corporation of India’s AEPS. It also supports transactions between Aadhaar linked accounts through Aadhaar enabled devices as per the specifications of NPCI, UIDAI and CBS.
FinAEPs supports transactions that do not involve the use of plastic cards at conventional ATMs. Customers do not have to carry their cards. They can initiate transactions by manually entering the Aadhaar number on the ATM and then make their thumb impression instead of entering a PIN.
Merchants can also use FinAEPS easily. FinAEPS forms an interface between the bank’s ATM switch, micro ATMs/Tablets and CBS for performing Aadhaar based transactions and Aadhaar Authentication. At Finacus, we offer a full fledged agent banking solution or BC model that combines the features of FinMOBICONNECT and FinAEPS to provide the end user with a wide variety of services.