October 7, 2026 · Guides

AEPS Facility for Societies and Lenders: How It Works

The AEPS facility lets a customer carry out a basic bank transaction with an Aadhaar number and a fingerprint, with no card and no PIN. Many societies and lenders in smaller towns and villages hear about it from members who already use it at a shop or a business correspondent point. This guide explains how AEPS works, how a society would run it day to day, and what to check before you add it to your software.

In this guide

What AEPS is
How to use it
How it helps the business
Common mistakes
What to check in a demo
Related reading
FAQs

What AEPS is

AEPS, the Aadhaar Enabled Payment System, lets a person who has an Aadhaar-linked bank account do things like a balance enquiry or a cash withdrawal by authenticating with a fingerprint on a small device. The transaction travels through the payment network to the person’s bank. The person never types a PIN or carries a card.

Taxhint lists an AEPS facility in its credit and thrift society management software. The page does not describe the transaction types, the partner arrangement or the posting rules in detail, so those are the first things to ask about. For the wider set of QR, NACH and e-mandate options, read AEPS and digital payments in society and loan software.

One caution up front. Software can carry the transaction, but it cannot decide whether your society is allowed to offer it. That comes from your own State or Multi-State co-operative law, your bank arrangements and the payment rules in force. Check with your CA first.

How to use it

A typical day with AEPS at a branch or an agent point looks like this.

Owner or manager: confirm in writing that the society may offer the service, and note the partner and the settlement account.
Manager: give AEPS rights only to the staff who need them, and set a daily limit that matches the cash you actually keep.
Clerk or agent: ask the customer for the Aadhaar number, select the transaction type and take the fingerprint on the device.
System: returns success or failure. The clerk pays out cash only after a success message.
Clerk: hand over a receipt and keep the transaction reference.
Accountant: at day end, match the AEPS transactions against the cash paid out and the settlement amount.
Manager: review failed and reversed transactions the next morning.

The same app habits apply as in the field. If your agents already follow the routine in mobile apps for collection and customers, AEPS will feel familiar.

How it helps the business

Picture a daily deposit agent in a village, two hours from the head office. A customer wants a small amount of cash. Without AEPS the agent says come to the branch. With a working AEPS point, the customer gets cash nearby, and the society keeps the relationship and the footfall.

It can also give a society a way to offer a service that members otherwise get elsewhere. Whether that adds income depends on the commercial terms you agree, so do not budget for it until the terms are in writing.

Numbers to watch:

Number of AEPS transactions per day and per agent point.
Failed or reversed transactions as a count, and how long each takes to settle.
The difference between cash paid out and settlement received, which should be zero after reconciliation.

Common mistakes

Starting the service before confirming that your society may offer it.
Paying cash before the success message appears on screen.
Letting every user run AEPS, with no daily limit.
Skipping the day-end match, so small differences pile up for weeks.
Collecting Aadhaar numbers on paper and leaving them lying on the counter. Follow current law on handling them.
Promising members a service before the partner arrangement is signed.

What to check in a demo

Ask to see	Why it matters
A full test transaction	From fingerprint to receipt to ledger entry
A failed transaction	Shows what staff see and what happens to the cash
User rights and limits	Confirms who can run AEPS and up to what amount
Day-end reconciliation report	Needed for your accountant and auditor
Partner and settlement details	Ask who settles the money and how quickly
Link with other payment options	See how it sits beside QR and e-mandate, as covered in built-in checks and integrations

Want to see this working on your own data? See the credit and thrift society management software, ask for a live demo on +91 93117 95484, or write to mail@taxhint.in.

FAQs

What does AEPS stand for?

It stands for Aadhaar Enabled Payment System. A customer proves who they are with Aadhaar-based biometric authentication, and a bank transaction such as a balance check or a cash withdrawal is processed through the payment network.

Can any society offer AEPS to its members?

Not automatically. It depends on your own Act and Rules, your bank arrangements and the current rules of the payment system. Please confirm with your CA or your regulator before you promise it to members.

Does AEPS replace the cash counter?

Usually no. The society still has its own deposits, loans and cash book, and AEPS is an extra service that must reconcile with them. Plan the day-end tally before you start.

What should I ask Taxhint about AEPS?

Ask who the settlement partner is, how each transaction posts to the society ledger, and what a failed or reversed transaction looks like. We can show it in a live demo on your own set-up.