New security feature added to Aadhaar-linked payment systems to prevent frauds

Since the AEPS has enabled more than 1,507 crore last-mile banking transactions so far, there have been around 7.54 lakh fraudulent transactions in the system (as per the percentage mentioned by the official).

The new security feature was fast tracked and implemented after several reports of misuse of AEPS across the country.

As per reports, the fraudulent transactions were carried out using fingerprints which were cloned on silicon pads. These fingerprints were copied from land transaction records that were uploaded to the websites of land revenue departments.

Commenting on the same, Shams Tabrej Founder and CEO of Ezeepay said that the new feature will help in tracking down fraudulent fingerprints and illegal transactions, therefore this will ensure improved authentication and security.

"In recent times we have witnessed many forgeries and incidents of fraud, primarily affecting people in rural areas, they have complained about malicious transactions of money from unknown locations that cause them affliction and monetary loss by bogus fingerprints," he said.

Currently, the government has around 5 million AEPS PoS machines in the country out of which 3.5 million are active per month.

The National Payments Corporation of India (NPCI) had earlier issued guidelines for banks and non-banking financial institutions (NBFCs) to curb instances of fraud last September. The guidelines directed banks to notify within five days of a customer registering a complaint regarding fraud.

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