AePS — Your Gateway to Easy Banking

Backspace Tech
5 min readFeb 9, 2024
Aadhaar Enabled Payment System (AePS)


The year nobody can forget! When the world shut down and the way we lived changed forever!

But amidst the chaos, there was a lifeline that emerged as a beacon of hope for millions of Indians.

What was that?

The Aadhaar Enabled Payment System (AePS)!

A whopping number of over 34 crore Indians benefitted from AePS during the pandemic through 20 lakh active terminals.

Curious to know about this Indian Payment System?

Read on to discover the system that empowers crores of Indians. Becoming their knight in shining armor during the toughest of times.

Aadhaar Enabled Payment System (AePS)

The Aadhaar Enabled Payment System (AePS) is a model initiated by the National Payments Corporation of India (NPCI) under the guidance of banks. This model facilitates transactions on Micro ATMs, kiosks, and mobile devices through authorized Business Correspondents (BCs) [BC is like a Franchise of the Bank]

How and Why was AEPS Conceived?

The background of the AePS originates from India’s initiative to establish a unified identity system through the Unique Identification Authority of India (UIDAI). Aadhaar is a unique identification number and irrefutable proof, ensuring verifiable authentication anytime and anywhere. Its purpose expanded to guarantee targeted delivery of financial subsidies and services across the nation.

To expedite financial inclusion, the Reserve Bank of India (RBI) formed working groups on Micro ATM standards and Central Infrastructure for Aadhaar-based financial transactions. Micro ATM standards were established, allowing financial transactions using Aadhaar authentication while maintaining encryption and security standards. Aadhaar authentication, designed for convenience, streamlines identity verification without physical documents.

Recognizing Aadhaar’s potential, the NPCI developed AePS, aligning with the Government of India’s financial inclusion goals, and utilizing Aadhaar authentication through the BC channel to facilitate secure and accessible financial transactions.


Explored the AePS origin!

Now meet the crew steering it today!

Steering Group and Live Members

Steering Group

[Responsible for guiding and overseeing the direction and execution]

Presently, 23 members (both government and private banks and government organizations)

Live Members

Presently, 35 Mainline Commercial Banks, 40 Regional Rural Banks, 52 Co-operative Banks, 15 Payment Banks, and Small Finance Banks, and 7 Non-Banks are live with NPCI for AePS services.

Buckle Up!

Regarding services, Let us know what AePS offers!


With an Aadhaar-linked bank account, users can leverage AePS for various banking services:

  • Balance Inquiry
  • Cash Withdrawal
  • Cash Deposit
  • Aadhaar to Aadhaar Fund Transfer
  • Mini Statement
  • Purchases
  • Self-Help Group (SHG) Transactions

In addition to the above, AePS also helps verify user Aadhaar seeding status for receiving government benefits through Direct Benefit Transfer (DBT).

But wait!

The above services are for whom?

Any resident of India with an Aadhaar number linked to a bank account, known as an Aadhaar Enabled Bank Account (AEBA), can make use of the AePS service.

Requirements to do an AePS Transaction

  • Aadhaar Number/Virtual ID
  • Bank Name/IIN
  • Biometric captured during their enrolment.
  • Transaction Type (If needed)

Objectives of AePS

Primary Objective

Empower people: AePS aims to make basic banking services accessible and convenient for everyone, especially those in unbanked or underbanked areas, by using Aadhaar as their identity. This includes depositing cash, withdrawing cash, transferring funds within and between banks, checking balances, and getting mini statements through BCs.

Secondary Objectives

  • Digital Payments: It aligns with RBI’s objective of promoting digital payments, and reducing dependence on cash.
  • Government Entitlement Disbursement: It facilitates the safe and secure distribution of government benefits like National Rural Employment Guarantee (NREGA) wages, pensions, etc., using Aadhaar authentication.

Participants and Benefits

How Does AePS Work?

As most of the Indian bank accounts are Aadhar-linked, their accounts are AePS enabled. So the user needs to,

Step 1: Approach an AePS-enabled service provider (Eg: BC)

Step 2: Inform the AePS provider of the desired transaction (e.g., cash withdrawal, balance inquiry, etc)

Step 3: Enter the Aadhaar number on the device of the BC.

Step 4: Provide biometric authentication (fingerprint or iris scan)

Step 5: Review transaction details on the screen (amount, beneficiary, etc.)

Step 6: Confirm the transaction.

Step 7: Receive confirmation message/receipt (if successful)


And that’s how a transaction is completed.

Key Information about AePS

  • Maximum transaction amount of Rs. 10,000 on a single AePS financial transaction.
  • Unlike other methods, AEPS transactions don’t require OTPs or PINs. It’s a straightforward process without the hassle of remembering additional codes.
  • If you have multiple accounts with the same bank, be aware that AePS will use only your main bank account.
  • AePS only works for transactions between Aadhaar-linked bank accounts.



Where there’s moolah, there’s bound to be a little melodrama called disputes!

So, if the user faces any unauthorized/ failed transaction or anything fishy, they can tap their issuing bank’s shoulder. The bank, in turn, will raise to the NPCI’s Dispute Management System who in turn will communicate the issue to the acquirer.

The Double-Edged Sword

While AePS was a hero for many during the pandemic, its reliance on fingerprints introduces a major drawback: frequent transaction failures. Studies show a 34% failure rate, often due to biometric mismatches, bank system issues, weak internet, or insufficient funds. This can be frustrating and inconvenient, especially for those relying on it for essential services.

However, we can’t ignore its advantages: transactions are done without the need for debit cards/ internet banking, making it accessible to even the underbanked population. This convenience and inclusivity remain significant strengths despite the technical hurdles.

In conclusion, AePS offers basic payments to government services, and its reach extends far beyond banking the unbanked, fostering financial inclusion and empowerment.

To know more about the payment ecosystem, chargeback, and dispute nuances through delightful bytes of information, follow us on LinkedIn, Twitter, Facebook, and Threads.

P.S: What topic do you think we should explore next? Let us know in the comments.



Backspace Tech

Backspace Tech offers Fintech-as-a-Service to automate,simplify, and disrupt the payment industry by handling chargeback requests through a plug-and-play model.