Aadhaar-Enabled Payment System (AEPS)

What is AEPS?

AEPS is an interoperable payment system that allows users to carry out banking transactions using their Aadhaar. It is managed and regulated by the NPCI, which also serves as the central switching and settlement authority. To use AEPS, you must have an Aadhaar number linked to a bank account and complete biometric authentication through fingerprint or iris verification. 

The system operates through micro-ATMs and banking correspondents, enabling services such as cash withdrawals, balance inquiries, mini-statements, and cash deposits. A key feature of AEPS is that it does not require a card, PIN, or OTP, and it works seamlessly across different banks.

How does AEPS work?

AEPS enables Aadhaar-based banking transactions through a simple biometric authentication process that connects customers, banks, and NPCI in real time. It is widely used via banking correspondents and micro-ATMs, especially in areas with limited banking infrastructure.

• The customer visits a banking correspondent agent or a micro-ATM to initiate the transaction.
• Aadhaar number is entered, and the customer selects the bank linked to their Aadhaar.
• Biometric authentication is captured using fingerprint or iris verification linked to UIDAI records.
• The transaction request is forwarded to the NPCI switch, which acts as the central routing system.
• NPCI processes and routes the request to the customer’s issuing bank for verification.
• The bank checks identity credentials and account balance before allowing the transaction.
• The transaction is either approved or declined instantly based on verification results.
• A digital record or printed receipt is generated to confirm completion of the transaction.

Who can use AEPS?

AEPS can be used by individuals with an Aadhaar-linked bank account to access banking services via biometric authentication. It is especially useful for people without debit cards or smartphones, as well as rural citizens who rely on banking correspondent networks. The system is widely used by beneficiaries of government schemes such as Direct Benefit Transfer, pensions, and wage payments. It improves access for financially underserved populations by enabling identity-based banking. However, not all bank accounts are automatically enabled for AEPS, and in many cases, activation at the bank level is required before services can be used.

AEPS transaction limits (2026)

AEPS transaction limits in 2026 are guided by an NPCI framework but vary across banks. Cash withdrawals are generally capped at ₹10,000 per transaction, while daily limits typically range from ₹25,000 to ₹50,000, depending on the bank’s policy. Where fund transfer features are enabled, similar caps often apply. There is no single uniform national limit across all banks, which often leads to confusion due to outdated or inconsistent information online. These limits are regularly adjusted based on fraud monitoring systems and risk controls implemented by NPCI and individual banks. 

Banks supporting AEPS

AEPS is supported by most public sector banks, private banks, and regional rural banks through the NPCI interoperable network. This enables customers to conduct cross-bank transactions via the banking correspondent infrastructure, even in remote locations where access to traditional banking is limited. Cross-bank AEPS transactions are widely facilitated through this system, improving financial accessibility.

However, concerns about incomplete bank coverage often arise due to partial integration of smaller banks and delays in updating the NPCI participation registry. In certain cases, banks may also offer limited AEPS services such as withdrawal-only functionality. Overall availability depends on NPCI switch integration and bank-level activation policies.

AEPS for the rural and unbanked population

AEPS plays a key role in financial inclusion in rural India by enabling banking transactions without the need for physical branches or ATMs. It is delivered through banking correspondents operating in villages, allowing users to access cash withdrawal, deposits, and account services locally. The system supports the Direct Benefit Transfer ecosystem, helping reduce travel time and transaction costs while improving cash accessibility. It is especially important for pensioners, daily wage workers, and subsidy beneficiaries who depend on regular payouts. AEPS strengthens last-mile banking infrastructure by linking Aadhaar identity with bank accounts. However, it also faces challenges, including heavy reliance on BC agents, cash availability issues, uneven service quality, and inconsistent geographic coverage across regions.

Are AEPS transactions safe?

AEPS transactions are secured through Aadhaar-based biometric authentication, where fingerprint or iris data is verified against UIDAI records. The system operates on NPCI’s secured switching infrastructure, while banks independently validate and approve each transaction in real time, creating a layered security process. Safety measures include device binding of micro-ATMs to authorized banking correspondents, encrypted transaction routing, real-time fraud monitoring, and transaction caps to limit exposure. RBI and NPCI guidelines further enforce audit trails and BC compliance checks.