RBI to further strengthen security features of AePS to curb frauds
SECTIONSRBI to further strengthen security features of AePS to curb fraudsET BureauRate StoryFollow usShareFont SizeAbcSmallAbcMediumAbcLargeSavePrintCommentSynopsis
The Reserve Bank of India announces plans to bolster security measures for the Aadhaar-enabled payment system (AePS) to combat fraud risks. Current concerns revolve around the lack of two-factor authentication, posing vulnerabilities, especially for older users. The move aims to introduce additional fraud prevention mechanisms, potentially including timed OTP authentication. Strengthening AePS security is vital for fostering financial inclusivity, particularly in rural areas where digital literacy may be lower.
RBI to enhance vigilance over Aadhaar-Enabled Payment System, release framework soon The Reserve Bank of India will streamline the process of onboarding the Aadhaar-enabled payment system (AePS) service providers and introduce additional fraud risk management measures.
Right now, there is no two-factor authentication for Aadhaar-enabled payments, which is risky and the cause for many frauds. The customer can pay the merchant by entering their Aadhaar number and biometrics like fingerprints and iris. Fraud happens more to older people, as fingerprints become difficult to capture with age.
"Copying biometric data like fingerprints is easy. If we can add a 2-factor authentication like a timed OTP, it will become more secure," said Rajesh Londhe, head of payments, PhiCommerce. The National Payments Corporation of India took steps to strengthen the security of AePS transactions in December 2023 by mandating Aadhaar-based biometric authentication for business correspondents and agents, to prevent 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 post-policy press conference.
AePS serves as 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.
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