{"id":60179,"date":"2020-05-09T21:13:41","date_gmt":"2020-05-09T15:43:41","guid":{"rendered":"https:\/\/blog.forumias.com\/?page_id=60179"},"modified":"2020-05-09T21:13:41","modified_gmt":"2020-05-09T15:43:41","slug":"failure-of-aadhar-based-payment-system","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/failure-of-aadhar-based-payment-system\/","title":{"rendered":"Failure\u00a0Of\u00a0Aadhar Based Payment System\u00a0"},"content":{"rendered":"<h3 class=\"note1\"><span data-contrast=\"auto\">Failure\u00a0<\/span><span data-contrast=\"auto\">Of<\/span><span data-contrast=\"auto\">\u00a0Aadhar Based Payment System<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/h3>\n<p><b><span data-contrast=\"auto\">Source<\/span><\/b><span data-contrast=\"auto\">\u00a0\u2013\u00a0<\/span><a href=\"https:\/\/www.livemint.com\/opinion\/columns\/fix-the-problems-in-aadhaar-based-cash-transactions-11588930862806.html\"><span data-contrast=\"none\">Livemint<\/span><\/a><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><em><b>Syllabus<\/b>\u00a0\u2013 GS Paper 2 \u2013 E-governance- applications, models, successes, limitations, and potential\u00a0<\/em><\/p>\n<p><b><span data-contrast=\"auto\">Context<\/span><\/b><span data-contrast=\"auto\">\u00a0\u2013 Rising transaction failure in\u00a0<\/span><span data-contrast=\"auto\">AePS<\/span><span data-contrast=\"auto\">\u00a0(Aadhaar Enabled Payment System) amidst COVID lockdown.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is\u00a0<\/span><\/b><b><span data-contrast=\"auto\">AePS<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:200,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">AePS<\/span><span data-contrast=\"auto\">\u00a0is a bank led model which allows online interoperable financial inclusion transaction at Point of Sale (<\/span><span data-contrast=\"auto\">MicroATM<\/span><span data-contrast=\"auto\">) through the Business correspondent of any bank using the Aadhaar authentication.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The only inputs required for a customer to do a transaction under this scenario\u00a0<\/span><span data-contrast=\"auto\">are:-<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"13\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">IIN (Identifying the Bank to which the customer is associated)<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"13\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Aadhaar Number<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"13\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Fingerprint captured during their enrollment<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Data<\/span><\/b><span data-contrast=\"auto\">\u00a0\u2013 From 172 million transactions in\u00a0<\/span><span data-contrast=\"auto\">March,<\/span><span data-contrast=\"auto\">\u00a02020 steep rise in\u00a0<\/span><span data-contrast=\"auto\">AePS<\/span><span data-contrast=\"auto\">\u00a0use in April, 2020 \u2013 403 Million transactions\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Significance of increased transactions:<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">Widespread use of digital payment methods across nation.<\/span><\/li>\n<li><span data-contrast=\"auto\">Successful cash transfer by government amid lockdown.\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Promotes financial inclusion by harnessing digital technology.<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">Challenge associated with\u00a0<\/span><\/b><b><span data-contrast=\"auto\">AePS<\/span><\/b><b><span data-contrast=\"auto\">\u00a0transactions<\/span><\/b><span data-contrast=\"auto\">\u2013 Average rate of failure of transactions is 39% which has following implications-<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">Citizens, especially, poor sections are deprived of cash and thus<\/span><b><span data-contrast=\"auto\">reduced demand<\/span><\/b><span data-contrast=\"auto\">in rural India.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Accounts still debited without cash being disbursed<\/span><\/b><span data-contrast=\"auto\">\u2013 finance institutions take 14-15 days to return the money or in some cases are not even returned.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Trust- Deficit among citizens-<\/span><\/b><span data-contrast=\"auto\">Repeated failures and loss of money if not returned, causes trust deficit among citizens thus promote informal financial systems.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">Causes of Failure in\u00a0<\/span><\/b><b><span data-contrast=\"auto\">AePS<\/span><\/b><b><span data-contrast=\"auto\">\u00a0transactions:<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">In many cases, bank accounts are not directly linked to Aadhaar<\/span><\/li>\n<li><span data-contrast=\"auto\">Insufficient or frozen funds in account<\/span><\/li>\n<li><span data-contrast=\"auto\">Poor connectivity due to lack of infrastructure needed<\/span><\/li>\n<li><span data-contrast=\"auto\">Authentication issues due to mismatches<\/span><\/li>\n<li><span data-contrast=\"auto\">Timeout of transaction due to no response from NPCI (<\/span><span data-contrast=\"auto\">National Payments Corporation of India)<\/span><span data-contrast=\"auto\">switch<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">Reforms<\/span><\/b><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">Financial institutions need to upgrade their server capacity.<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Banking Correspondents<\/span><\/b><span data-contrast=\"auto\">\u2013\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Can provide account balance details to customer before transaction is made.<\/span><\/li>\n<li><span data-contrast=\"auto\">Facilitate simplified redressal in case of failure of transaction.<\/span><\/li>\n<li><span data-contrast=\"auto\">For<\/span><b><span data-contrast=\"auto\">biometric authentication<\/span><\/b><span data-contrast=\"auto\">\u2013 Consumer to be given option of re-recoding fingerprint after conducting a thorough, transparent and account audit of failed biometric.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">Way Forward<\/span><\/b><span data-contrast=\"auto\">\u00a0\u2013 Nandan Nilekani and Rattan\u00a0<\/span><span data-contrast=\"auto\">Watal<\/span><span data-contrast=\"auto\">\u00a0Committees on digital payment has promoted use of\u00a0<\/span><span data-contrast=\"auto\">AePS<\/span><span data-contrast=\"auto\">\u00a0for financial inclusion by bringing necessary reforms.\u00a0<\/span><\/p>\n<p><a href=\"http:\/\/blog.forumias.com\/9-pm-daily-brief-may-9th-2020\/\">Link to 9pm brief<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Failure\u00a0Of\u00a0Aadhar Based Payment System\u00a0 Source\u00a0\u2013\u00a0Livemint\u00a0\u00a0 Syllabus\u00a0\u2013 GS Paper 2 \u2013 E-governance- applications, models, successes, limitations, and potential\u00a0 Context\u00a0\u2013 Rising transaction failure in\u00a0AePS\u00a0(Aadhaar Enabled Payment System) amidst COVID lockdown.\u00a0 What is\u00a0AePS\u00a0\u00a0 AePS\u00a0is a bank led model which allows online interoperable financial inclusion transaction at Point of Sale (MicroATM) through the Business correspondent of any bank using&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/failure-of-aadhar-based-payment-system\/\">Continue reading <span class=\"screen-reader-text\">Failure\u00a0Of\u00a0Aadhar Based Payment System\u00a0<\/span><\/a><\/p>\n","protected":false},"author":10300,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-60179","page","type-page","status-publish","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/60179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10300"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=60179"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/60179\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=60179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}