UIDAI implements fingerprint 'liveliness', know how it will reduce fraud in Aadhaar-linked payments

The UIDAI (Unique Identification Authority of India) recently added a new security feature to the Aadhaar Enabled Payment System (AEPS). It is anticipated that the security measure, known as fingerprint "liveliness," will help prevent the use of fake fingerprints to make AEPS withdrawals.

A senior government official, according to an ET report, stated that the new feature has been pushed to AEPS point of sale (PoS) machines via a software upgrade.

The PoS can now determine whether the fingerprint being used belongs to a living person or not. According to the official who was previously mentioned, fraud occurs very infrequently (approximately 0.005% of the time).

According to current statistics, AEPS has enabled over 1,507 Cr last-mile banking transactions. As a result, the system has seen almost 7.54 lakh fraudulent transactions (a simple calculation, taking the number of transactions and the percentage of fraudulent transactions).

Following several reports of AEPS misuse across the country, the new security feature was implemented.

The government has approximately 5 million AEPS PoS machines across the country, with 3.5 million of them active each month.

According to media reports, the fingerprints were cloned on silicon pads and copied from land transaction records uploaded to land revenue departments' websites.

To combat fraud, the National Payments Corporation of India (NPCI) issued guidelines for banks and non-banking financial institutions (NBFCs).

The guidelines, which were implemented in September, required banks to notify customers within five days of filing a complaint.

The NPCI also requested that the banks submit a detailed investigation report into the incident within the same time frame. Furthermore, the acquirer bank would be given 10 days to make their submissions, claiming that the liability for fraud does not fall on them.

What Exactly Is AEPS?

Users can withdraw money from their bank accounts using their fingerprints under the Aadhaar-enabled system. The feature was introduced in the country in 2016 and gained popularity during the nationwide lockdown imposed due to the COVID-19 pandemic.
If a person's bank account and Aadhaar card are linked, they can withdraw money using the fingerprint data stored in the Aadhaar database.

A user can use a PoS machine to verify their information and receive cash. Users can also use their fingerprint data to make deposits, transfer money, receive mini statements, and check their bank balances.
AEPS approved 21.36 Cr off-us transactions worth INR 26,670.30 Cr in August 2022, slightly less than in July 2022. AEPS has enabled 110.62 Cr transactions worth INR 1.45 Lakh Cr in the current fiscal year.