UIDAI Introduces Fingerprint ‘Liveliness’ To Curb Fraud In Aadhar-Enabled Payments

The Unique Identification Authority of India (UIDAI) recently introduced a new security feature to the Aadhaar Enabled Payment System (AEPS). The security feature is called fingerprint ‘liveliness’ and is expected to help prevent using fake fingerprints to withdraw money through AEPS.

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

The PoS now will be able to determine whether the fingerprint being used belongs to a person who’s alive or not. The official cited above also added that instances of fraud are rare (about 0.005%).

Per recent statistics, AEPS has enabled more than 1,507 Cr last-mile banking transactions so far. Therefore, there have been around 7.54 Lakh fraudulent transactions in the system (a simple calculation, taking the number of transactions and the percentage of fraudulent transactions).

There were several reports of misuse of AEPS across the country, hence the new security feature has been implemented.

The government has around 5 Mn AEPS PoS machines across the country, of which 3.5 Mn are active per month.

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

However, the National Payments Corporation of India (NPCI) issued guidelines for banks and non-banking financial institutions (NBFCs) to curb instances of fraud. 

Introduced last September, the guidelines directed banks to notify within five days of a customer registering a complaint. 

The NPCI also asked the banks to submit a detailed investigation report of the incident within the same span. Further, the acquirer bank would have 10 days to make their submissions, contending that the liability of fraud is not at their end. 

What Is AEPS?

The Aadhaar-enabled system allows users to withdraw money from their bank accounts using fingerprints. The feature was launched in 2016 in the country and took off during the nationwide lockdown enforced because of the COVID-19 pandemic.

If the person’s bank account and Aadhaar card are linked, they can use the fingerprint data stored in the Aadhaar database to withdraw money. 

A user can verify their details on a PoS machine and receive cash. Users can also make deposits, transfer money, receive mini statements and check their bank balance with their fingerprint data.

In August 2022, AEPS approved 21.36 Cr off-us transactions worth INR 26,670.30 Cr, slightly lower than July 2022. In the current fiscal year, AEPS has enabled 110.62 Cr transactions worth INR 1.45 Lakh Cr.