Aadhaar-Based Payment System (ABPS)

04.01.2024

Aadhaar-Based Payment System (ABPS) , Daily Current Affairs , RACE IAS : Best IAS Coaching in lucknow

Why in the news?

Under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) payments are made mandatory through an Aadhaar-based payment system (ABPS).

What is the Aadhaar-based payment system (ABPS)?

• Under ABPS, workers’ 12-digit Aadhaar numbers are linked with their job cards as well as their bank accounts.
• ABPS uses the worker’s Aadhaar number as their financial address.
• Aadhaar must be mapped with the National Payments Corporation of India (NCPI) database; and finally, the bank’s institutional identification number must itself be mapped with the NPCI database.
• The system was first made mandatory with effect from February 1, 2023 but, through several extensions, the Centre allowed it until December 31, 2023.
• The ABPS became mandatory from January 1, 2024.

Benefits of Payments through ABPS

• Easy and Secure Authentication: Aadhaar provides a unique identification method through biometric authentication (fingerprint or iris scans), making transactions secure and reducing the risk of fraud.
• Convenient: Aadhaar-based payment systems eliminate the need for physical cards or documents for financial transactions.

○Users can authenticate themselves using their Aadhaar number and biometrics, making the process more convenient.

○It ensures the payment of beneficiaries into their bank accounts, even in case of frequent change of bank account by the beneficiary.

• Reduced Leakages in Subsidy Programs: Aadhaar is often linked to various government subsidy and welfare programs, ensuring that the benefits reach the intended beneficiaries directly.
• Promotion of Digital Payments: Integration of Aadhaar into payment systems contributes to the government’s push for a less-cash economy by promoting digital transactions.
• This aligns with broader initiatives to enhance the digital infrastructure of the country.

Concerns with ABPS Payments

Over- Reliance: Over-reliance on technical tools has resulted in problematic implementation, with beneficiaries devoid of a proper recourse for corrections in the system.

Authentication Issues: There have been instances where individuals faced difficulties with biometric authentication due to factors such as poor connectivity, technical glitches, or errors in the Aadhaar database.

○Errors in any step of the process result in payment failures.

                                                              Source: The Hindu