September 18 , 2017


S ince Modi government launched his demonetization drive, the country has been facing a severe cash problem. Pursuing relentless complaints from people, Opposition, and bankers, the government introduced a series of measures to ensure people can take away money, and one such measure is micro ATM.

Micro ATMs has been released basically to facilitate residents of those areas of the country, where no banks are available easily with any ATM facilities.

Micro ATMs are basically a card swipe machine just like a PoS(Point of Sale) terminals, this terminal can connect to bank’s core banking system via GPRS to perform banking transactions. This machine is also facilitates with bio-metric device, which can verify the user. These machines are carried by bank correspondent or shop keepers in remote location where bank can’t reach. The bank correspondent verify the user and then customer able to do the financial transaction.

Basically here we will discuss regarding the latest version of Micro ATM, based on Aadhaar Enabled Payment System(AEPS), where ATM card or swipe machines are not required.


Aadhaar Enabled Payment System or AEPS is the latest payment service proposed by NPCI (National Payments Corporation of India) to banks, financial corporations using Aadhaar number and online UIDAI authentication through their respective Business representative service centers.

AEPS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication.

The four Aadhaar enabled basic types of banking transactions are as follows:-

  • Balance Enquiry
  • Cash Withdrawal
  • Fingerprint captured during their enrollment and an OTP to his/her registered mobile number

The only inputs required for a customer to do a transaction under this scenario are:-

  • IIN (Identifying the Bank to which the customer is associated)
  • Aadhaar Number
  • Cash Deposit
  • Aadhaar to Aadhaar Funds Transfer

How does AEPS Work?

To enable same, UIDAI has partnered with various stakeholders including RBI, NPCI, IBA and banks to develop two key platforms :-

  • Aadhaar Payments Bridge (APB) – A system that facilitates seamless transfer of all welfare scheme payments to beneficiary residents' Aadhaar Enabled Bank Account (AEBA)
  • Aadhaar Enabled Payment System (AEPS) – A system that leverages Aadhaar online authentication and enables AEBAs to be operated in anytime-anywhere banking mode by the marginalized d financially excluded segments of society through micro ATMs

APB is a repository of Aadhaar number of residents and their primary bank account number used for receiving all social security and entitlement payments from various government agencies.

It requires using Aadhaar number as the primary key for all entitlement payments. This would weed out all fakes and ghosts from the system and ensure that the benefits reach the intended beneficiaries.

This benefit has an even greater ramification as more and more social security programs are moving from in-kind to in-cash subsidies.

Aadhaar Enabled Payment System

The Report of the Committee on Financial Inclusion, made two important o bservations :-

  • Technology has to enable the banks to go where the customer is present, instead of the other way around.
  • Technology should allow interoperability among different systems adopted by different banks.

The Aadhaar Payment System is intended to address both the above issues. AEPS empowers the marginalized and excluded segments to conduct financial transactions (Credit, Debit, Remittances, Balance Inquiry, etc) through micro ATMs deployed by Banks in their villages.

AEPS Process Steps

The key steps in doing transactions via AEPS are :-

  • Resident provides his/her Aadhaar number, details of financial transaction sought and fingerprint impression at the micro ATM device.
  • Digitally signed and encrypted data packets are transferred via Bank Switch to NPCI to UIDAI.
  • UIDAI processes the authentication request and communicates the outcome in form of Yes/No.
  • If the authentication response is Yes, bank carries out the required authorization process and advises micro ATM on suitable next steps.

Architecture of Aadhaar Enabled Payment System (AEPS)

Connectivity - Process Flow :-

Aadhaar Authentication - Process Flow :-

Customer’s Inputs :-

  • IIN ( Issuer Identification Number issued by National Payments Corporation of India for the specified service)
  • AADHAAR Number
  • Fingerprint Data

Aadhaar Initiated Inter Bank Balance Inquiry, Cash Deposit, Cash Withdrawal - Process flow :-

Customer’s Inputs :-

  • IIN ( Issuer Identification Number issued by National Payments Corporation of India for the specified service)
  • AADHAAR Number
  • Amount of Cash to be Deposited/Withdrawn
  • Fingerprint Data

Aadhaar to Aadhaar Interbank Funds Transfer - Process flow :-

Remitting Customer’s Inputs :-

  • IIN ( Issuer Identification Number issued by National Payments Corporation of India for the specified service)
  • AADHAAR Number
  • Amount of Cash to be Deposited/Withdrawn
  • Fingerprint Data

Beneficiary’s Details :-

  • IIN ( Issuer Identification Number issued by National Payments Corporation of India for the specified service)
  • AADHAAR Number

Benefits of Aadhaar Enabled Payment System :-

  • You can perform financial and non-financial transaction through the banking correspondent.
  • A banking correspondent of any bank can do the specified transaction of any bank.
  • There is no need of signature or debit card.
  • It is fast and secure. No one can forge your fingerprint.
  • Banking correspondent can reach to the distant rural place with the micro POS.


Micro ATM can’t provide anytime money. If the bank correspondent is unavailable or the shopkeeper has shut the shop, the account holder will not be able to do any financial transaction.


AEPS might be expensive than UPI and USSD yet it gives a ton of accommodation to the provincial/rural citizens. It would bring bank to their doorstep and save much time and transport cost. It would be much the same as a visit of ATM at each doorstep. That is the reason government calls the POS as Micro ATM. Recently, government has launched the BHIM Aadhaar Pay system. It has the excellencies of BHIM app as well as AEPS. Using this platform, one can pay to merchant without the card or mobile. The thumb impression is used for authentication.








Mobile Product Analyst, Digitization,Research Writer, Business Development Experts, Blogger, Startup, Tech News, Positive, experienced with Banking Payments Process implementation with Product Management & Customer Success Management Experience. Most important of all - A Learner

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