In April 2018, AEPS crossed 150 million transactions. A service initiated by the NPCI to boost financial inclusion in the country has become a national phenomenon. The objective is simple – enable every Aadhar-linked bank account with facilities for account holders at places where banks couldn’t reach.
This initiative has opened up new avenues for businesses to reach the unbanked by expanding their network with the help of managed technology. More on this later.. Let’s see how AEPS works?
How Does AEPS Work?
AEPS can work at any Micro-ATM or PoS (Point of Sale) through the Business correspondent of any bank using the Aadhaar authentication. To carry out transactions, customers will have to approach a business correspondent (BC).
The UIDAI and ID of customer are shared with NPCI for verification of details and funds. In order to carry out this business, the BC gets in touch with and agency banking network that provides him the required software and equipments to provide service.
So, AEPS is a huge business that involves agency banking startups that builds its own network of distributors and reach the end customers via business correspondents (BC).
Following are the types of transactions supported by AEPS
- Cash Withdrawal
- Cash Deposit
- Balance Enquiry
How Businesses Could Leverage From AEPS?
According to a report on The Times Of India, 20.1% of the population is still unbanked with 17.0% male and 23.4% female. NPCI has already initiated the AEPS service that needs support from agencies and business correspondents. These businesses will include the financially unbanked people by expanding their network, with the help of agency management platforms and technology provided by companies like Espay.
These businesses need agency banking platform that enables them to extend banking services to areas where people don’t have access to banking services. Companies need to find applications that have convenient on-boarding and enhanced controls for customer service.
With the help of Agency Banking Platform, businesses are able to:
- Boost the financial inclusion project into various areas in the country.
- Provide satisfactory customer service with robust technology with the highest uptime and quick transactions.
- Increase their network of agents and increase their earning potential.
Get lots of business potential owing to the number of unbanked population in India.
The Current State Of AEPS
The Aadhaar based payment system is currently being used for public distribution system (PDS) in states like Andhra Pradesh, Gujarat and Rajasthan. According to the CEO of UIDAI, Ajay Bhushan” We are enrolling banks so that they start accepting Aadhaar based payments.” There have been 111 crore Aadhaar enrolments done. With Aadhaar card being linked to various PDS, an amount of rupees 36,000 crore has been saved in the past two years. These PDS include MGNREGA and household LPG supply.
The UIDAI of India is currently working with several banks in order to make merchants adapt to the new payment system. Merchants who make use of mobile-based applications for cashless transactions would receive a commission up to 1% of the transaction value. Also, different banks provide different rewards to business correspondents based on their performance.
For example, Vidharbha Konkan Gramin Bank provides 0.5% of the money to the correspondent when money is deposited through PoS terminals.
How Does The Future Of AEPS Look?
This biometric based payment system is expected to allow lakhs of Indians to pay for various services and products digitally, anywhere in the country. With AEPS, buyers will not need internet-connected credit/debit cards, digital wallets or even mobile phones. The merchants will just have to install the BHIM Aadhaar mobile application on their phones and carry biometric reading devices along with them. This will prove to be very convenient for both, the buyers and sellers while making faster and verified payments.
Million-plus shops have been identified and about 100,000 mobile phones or terminals are already active. Banks are already looking to meet the targets provided by the RBI. So, it becomes evident that banks are looking for agent networks with a huge reach. Just have a look at the number of the POS built by major bank in the year 2018
Bank Of Baroda: 72,880
Corporation Bank: 1,56,378
State Bank of India: 6,18,452
Axis Bank Ltd: 5,05,792
The numbers are increasing and it shows that banks want more and more players who have the right set of technology and network to carry out their business. At Espay, we develop innovative solutions for agencies and enterprises to carry out their business operations smoothly.Contact us now and know how you could get started with AEPS business.
Image Source: (https://www.npci.org.in/)