RBI to streamline Aadhar-enabled payment system, introduce additional risk management measures

The Reserve Bank of India will streamline the process of onboarding the Aadhar-enabled payment system (AePS) service providers and introduce additional fraud risk management measures.

Right now, there is no two factor authentication for Aadhar enabled payments, which is risky and the cause for many frauds. The customer can pay the merchant by entering their Aadhar number and biometrics like fingerprints and iris. Fraud with iris happens more to older people, as fingerprints become difficult to capture with age.

“Copying biometric data like fingerprints is easy which is causing the fraud. If we can add a two factor authentication like a timed OTP, it will become much more secure”, said Rajesh Londhe, Head of Payments, PhiCommerce.


The National Payments Corporation of India (NPCI) took steps to strengthen the security of AePS transactions in December 2023 by mandating aadhar based biometric authentication for business correspondents and agents, to prevent the unauthorised use of customers' information.

Security of online transactions is key, especially in rural areas where many customers are not digitally savvy. “All touchpoint operators will go through a standardised and secure onboarding process, and other factors can also be added to it,” said T Rabi Sankar, Deputy Governor, RBI, at the post-policy press conference.

AePS serves as the UPI equivalent for rural India, acting as a gateway to the formal banking system. By bridging the gap between rural and urban areas, AePS continues to play an important role in fostering financial inclusivity.

433 million total approved transactions were recorded as of January 2024 via AePS, according to data from NPCI. This serves as a convenient access to crucial government benefits and subsidies directly into their bank accounts. “Approximately 1.1 million cases of such frauds had been registered in 2023 that involved an amount of Rs. Rs 7,488 crore, said Ankit Ratan, CEO, Signzy.