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Aadhaar Enabled Payment System (AePS)

Facts for Prelims (FFP)

 

Source: TH

 Context: In 2023, Aadhaar Enabled Payment System (AePS) frauds accounted for 11% of cyber financial scams originating in India, according to an analysis by the Indian Cyber Crime Coordination Centre (I4C).

Most of these frauds occurred in Bihar and Jharkhand. The central government’s portal and the 1930 helpline received over 13 lakh complaints related to cyber-enabled financial frauds. AePS fraud included instances of biometric cloning.

 

What is AePS?

It is a payment service that allows users to access their Aadhaar-enabled bank accounts for transactions. The analysis also highlighted other categories of cyber financial frauds, both locally and internationally, including sextortion, investment scams, illegal loan apps, and romance scams. Social media-related cybercrimes totaled 1,41,056 reported cases in 2023.

Details
What is AePS?The AePS is a bank-led model facilitating online interoperable financial transactions through Aadhaar authentication.
It is managed by the National Payments Corporation of India (NPCI), a joint initiative of the RBI and IBA.
Aimed at providing secure access to banking services, especially for rural and marginalized communities.
Working Eliminates the need for OTPs, bank details, and other financial information.
Transactions require only the bank name, Aadhaar number, and captured fingerprint during Aadhaar enrollment.
Benefits:Facilitates cash transfers for government schemes directly into beneficiaries’ accounts; Allows access to bank accounts through any Banking Correspondent or micro-ATM of any bank
How is AePS Exploited?Leaked Biometric Details: Cybercriminals use stolen biometric information for unauthorized transactions.
Silicone Thumbs: Scammers use silicone thumbs to deceive biometric devices and perform fraudulent transactions.
Lack of Transaction Notifications: Victims may not receive immediate alerts for unauthorized transactions.
Systemic Issues: Biometric mismatches, poor connectivity, and weaker systems affect performance and reliability.
Preventive MeasuresAmendments to Aadhar Regulations 2016: Proposed changes restrict the sharing of Aadhaar details without redaction.
Aadhaar Lock: Users are advised to lock and unlock the Aadhaar as needed to prevent unauthorized biometric use.
About I4CIndian Cyber Crime Coordination Centre (I4C) deals with all types of cybercrimes in India. It will be set up under the newly created Cyber and Information Security (CIS) division of the MHA.
The I4C aims to centralize cyber security investigations, develop response tools, and foster collaboration among private companies to combat cybercrime.