AADHAAR ENABLED PAYMENT SYSTEM (AePS)

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CONTEXT :

Recent reports regarding cybercriminals using silicone thumbs to operate biometric POS devices and biometric ATMs to drain users’ bank accounts.

WHAT IS AADHAAR ENABLED PAYMENT SYSTEM (AePS) ?

The Aadhaar enabled Payment System (AePS) is a bank led model which allows online financial transactions at Point of Sale (PoS) devices and micro ATMs of any bank using Aadhaar authentication.
It was taken up by the National Payments Corporation of India (NPCI) – a joint initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
The model removes the need for OTPs, bank account and other financial details.
It allows fund transfers using only the bank name, Aadhaar number, and fingerprint captured during Aadhaar enrolment, according to the National Payments Corporation of India (NPCI).

Banking Services Offered by AePS

ENABLING OF AePS :

Neither the Unique Identification Authority of India (UIDAI) nor NPCI mentions clearly whether AePS is enabled by default.
Cashless India, a website managed and run by the MeitY, says the service does not require any activation, with the only requirement being that the user’s bank account should be linked with their Aadhaar number.
Users who wish to receive any benefit or subsidy under schemes notified under section 7 of the Aadhaar Act, have to mandatorily submit their Aadhaar number to the banking service provider, according to the UIDAI.

The customer enters his Aadhaar number and certifies the identity either by thumb or by using a photograph of the iris of the eye by stating the deposit/withdrawal amount.
Once the identity is confirmed, the transaction is completed.

ISSUES RELATED TO AePS :

LEAKING OF BIOMETRIC DATA : As Aadhaar numbers are readily available in the form of photocopies, and soft copies, and criminals are using Aadhaar enabled payment systems to breach user information.
Scammers have, in the past, made use of silicone to trick devices into initiating transactions.
Failure in transactions owing to biometric mismatches, poor connectivity or weaker systems of certain banking partners, also affect the AePS.
An account not linked with an Aadhaar number lacks the KYC or may be a fake account.
An existing account number and IFSC code that uniquely identifies a branch of any bank are not sufficient to do a legitimate transaction.

SECURING AADHAAR BIOMETRIC INFORMATION :

The UIDAI is proposing an amendment to the Aadhaar (Sharing of Information) Regulations, 2016, which will require entities in possession of an Aadhaar number to not share details unless the Aadhaar numbers have been redacted or blacked out through appropriate means, both in print and electronic form.
The UIDAI has also implemented a new two factor authentication mechanism that uses a machine learning based security system, combining finger minutiae and finger image capture to check the ‘liveness’ of a fingerprint.
Additionally, users are also advised to ensure that they lock their Aadhaar information by visiting the UIDAI website or using the mobile app.
This will ensure that their biometric information, even if compromised, cannot be used to initiate financial transactions. It can be unlocked when the need for biometric authentication arises, such as for property registration and passport renewals, after which it can again be locked.

WAY FORWARD

Users are advised to inform their banks and the concerned authorities as soon as possible in case of fraud or breach.
Timely reporting can ensure that any money transferred using fraudulent means is returned to the victim.
The RBI in a circular has stated that a customer’s entitlement to zero liability arises where the unauthorised transaction occurs, and the customer notifies the bank within three working days of receiving a communication from the bank regarding such unauthorised transaction.

SYLLABUS: MAINS, INDIAN ECONOMY

SOURCE: THE HINDU

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