AePS: Combining technology with last-mile connectivity

Payments By Anand Kumar Bajaj, Founder, MD & CEO, PayNearby October, 2022

The last two years of the pandemic have seen a seismic shift in the world of digital banking as they went from merely an option to becoming an absolute necessity. But then, how did we get this far? It is nothing short of a revolution. And an integral part of this revolution has been AePS. While India has always been ahead of the curve when it comes to adapting to technology, Bharat has also proved that with little assistance, nothing is impossible.

AePS revolutionising financial inclusion

Aadhaar, the 12-digit individual identification number, has today grown to become the world’s largest biometric ID system. In a large and heterogeneous economy like India, serving as proof of identity and address, the Aadhaar ID has been a crucial enabler of inclusive financial services.

An Aadhaar-enabled Payment System (AePS) does not require a smartphone, a payment card, or an app, instead with just the Aadhaar number and biometric authentication, a host of banking services such as deposits, withdrawals and fund transfers are being seamlessly conducted at the point of sale. Thus, by offering simplicity, AePS has become the go-to solution for all kinds of digital transactions empowering people from all walks of life across the country. This is why it is referred to as a service for a crisis. AePS transactions can be readily done at any PoS via the Business Correspondents (BCs) of any bank utilising Aadhaar authentication. A user’s only inputs required are his/her bank name, Aadhaar number, and fingerprint authentication. Ergo, it is as simple as that.

The majority of the population in India resides in rural areas. However, owing to high transaction costs linked to poor infrastructure, most lack access to even basic financial services. People often need to travel miles to reach their nearest bank branches to access banking services. Additionally, digital illiteracy is a huge impediment as many in the country are still sceptical of digital transactions.

Today, more than 131 crore adults registered with Aadhaar have seamless access to banking, insurance and other direct benefit services. Over 5 crore Aadhaar-based identity authentications are daily done online across the country, even as more than 40 crore last mile banking transactions are being performed every month on the AePS system[1].

Promoting digital literacy through AePS

When it comes to transacting online, digital illiteracy is a serious concern for rural communities. People residing in remote areas are digitally shy. To do away with this inhibition, several fintech players are joining the movement to make digital services accessible to remote areas. The unserved part of society is now being introduced into the formal credit system with zero paperwork and low-end formalities owing to the assistance of the network of BCs. They have been effectively bridging the gap between the banking institutions and the unbanked masses located in the rural areas. With the agents’ relentless efforts and Aadhaar-enabled payments, customers can conduct basic banking transactions simply through the use of their thumb, which is a blessing at the last mile where there is a lack of adequate financial infrastructure.

India is getting future-proofed by NPCI with AePS. In today’s scenario, where millions of debit cards were taken out of the system during the lockdown because they did not adhere to the CHIP & PIN requirements, AePS has come as a blessing.  It makes it easier for people to access their account money, especially for people who depend on their subsidies for daily living. The distribution of Direct Benefit Transfer (DBT) would have been very difficult without AePS.

The rise in AePS and other digital banking transactions reflects the enormous latent demand for digital adoption across the country, especially in Tier 2 and remote regions. Our priority should be to empower our retailers and consumers by combining technology with last mile connectivity, to bridge the digital divide and establish an egalitarian Digital India.

– Anand Kumar Bajaj, Founder, MD & CEO, PayNearby


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