India’s Aadhaar payment system AePS sees rising financial fraud cases: report
Online fraud through the Aadhaar Enabled Payment System (AePS), a platform that allows merchants to accept payment from customers through Aadhaar authentication, accounted for 11 percent of online financial scams during 2023, a new analysis from India’s cybercrime watchdog has shown.
The Indian Cyber Crime Coordination Centre (I4C) revealed that most of the AePS fraud cases were committed in the Indian states of Bihar and Jharkhand. Overall, the cybercrime helpline initiated by the agency received 1.3 million complaints related to online financial fraud in 2023, the Hindu Business Line reports.
Financial fraud related to the country’s unique biometric identifier Aadhaar has been rising rapidly in India, including that related to the AePS. The country has seen multiple high-profile cases this year, including scams involving cloning Aadhaar-linked biometrics by using silicon fingerprints and unauthorized biometric devices.
Last week, the National Payments Corporation of India (NPCI) issued a notification to banks to implement additional security measures against scammers exploiting customers’ Aadhaar credentials to withdraw cash without authorization. The notice directed banks to enable AePS cash withdrawal only after conducting Aadhaar-based biometric authentication of business correspondents and agents.
AePS fraud cases have been traced to fingerprint authentication systems that did not employ liveness detection, which the Unique Identification Authority of India (UIDAI) had promised to roll out in March 2023. In October, authorities pushed a software update to introduce liveness detection to all UIDAI fingerprint biometric devices.
Spearheaded by the National Payment Corporation of India, the AePS payment service allows a bank customer to use Aadhaar as their identity to access their bank account and perform basic banking transactions. Although the Aadhaar system is not as popular as the Unified Payments Interface (UPI), Indians still withdraw around 10 billion rupees a day using AePS.