AePS stands for Aadhaar Enabled Payment System. It is a system that allows people to carry out financial transactions using their Aadhaar number and fingerprint for authentication. Aadhaar is a unique identification number issued by the Unique Identification Authority of India (UIDAI) to residents of India.
With AEPS, individuals can access basic banking services such as cash withdrawal, balance inquiry, and mini statement using their Aadhaar number and biometric authentication. This system aims to bring banking services to the doorstep of individuals in rural and remote areas where traditional banking infrastructure may be limited.
AEPS is part of the Indian government's initiative to promote financial inclusion and ensure that even those without traditional bank accounts can access basic banking services easily. It leverages the Aadhaar infrastructure to provide a secure and convenient means of financial transactions.
Best Practices to Follow for AePS:
Prior to enabling AePS services, it is imperative to conduct a comprehensive KYC and physical store verification of the merchant outlet. Strict adherence to the following points is crucial to prevent chargebacks and fraud chargeback:
- Maintain the following documents for all the cash withdrawal transactions:
a Cash Receipt/Register
b. Customer Consent Letter + Self Attested Aadhaar Card Copy
Note: Emphasizing about 1.2 document, if it is maintained properly with copy of Aadhaar card, all kinds of disputes like chargebacks or fraud claims will be resolved, preventing financial losses. Download the consent letter & Cash register format redirecting to Instantpay portal login-->My Account-->Resources- Validate the visiting customer's face with the Aadhaar card presented during the transaction.
Note: Ensure that the Aadhaar Card photo is genuine and has not been fabricated or altered.- Consider installing a proper CCTV system facing the customer during the transaction or take a photo from a webcam while handing over the cash to avoid any fake claim.
a. Aim to maintain CCTV footage for a minimum of 90 days.
b. If not feasible, retain clear webcam photo of customer handing over the cash.
c. Ensure the accurate mobile number is entered by the merchant during transactions
for effective contractability.
Note: Failure to produce the above proofs by the merchant may lead to authorities like LEA (Law Enforcement Agency) or regulators recovering the transaction amount and imposing penalties.- For AePS transactions, merchants must conduct transactions from their business location; a geo-fencing of 2 to 3 km from the business location should be imposed to control misuse.
a. During merchant onboarding, ensure correct business geo-coordinates are captured and passed in the outlet onboarding process.
b. Capture and push geo-coordinates for each transaction.
c. If the captured geo-location is beyond 3 km, decline the transaction at your level.
Note: Geo-coordinates to geo-coordinates distance calculator are available as opensource and if needed our Tech team will be able to assist you on demand.- If a user performs up to 2 biometric mismatch transactions for a single Aadhaar, the merchant should be blocked at your level, and EDD (Extended Due Diligence) should be performed with physical verification Click here to refer EDD process.
- Merchants are advised to monitor the customer's thumb during transactions to avoid transactions through fake biometric.
- Dormant merchants who have not conducted any transactions for more than 180 days will be deregistered and will not be able to perform any transactions. Reactivation of such merchants requires re-onboarding.