Technology as enabler for electronic benefit transfer – Case of Micro ATM, BC, Aadhaar Authentication System November 29, 2012 1

Challenges Benefit payments are made in non-standard methods that vary at state level, district level, and often block level, with high co-ordination costs. Stakeholders and concerns: Government: Ensure that the intended beneficiary is indeed the actual recipient, Visibility and auditability, citizen dissatisfaction Banks : Financial viability, policy uncertainty Resident : High opportunity and transaction costs

Desirable features of an efficient EBT system (1/2) Convenient single window enrollment process Minimal overhead for Government. Standard and common process for all Line Ministries and State Government to send money to a beneficiary’s bank account in a timely way. This also reduces co-ordination costs. Auditability and transparency of process to ensure that the correct beneficiary receives the transfers.

Desirable features of cash transfer system for beneficiaries (2/2) Beneficiaries should have the choice of multiple convenient locations to access cash. This may include bank branches, microATM customer service points, post offices, citizen service centres, etc. Beneficiaries should be able to access cash conveniently through a network of microATMs at the grassroots level, or using ATMs, mobiles, tellers at branches, postman, etc. The cash transfer system needs to be deployed at scale with 10 lakh transaction points to cover 7,00,000 villages

Why Aadhaar? One time Aadhaar enrolment and linkage with scheme Aadhaar can act as a financial address for transfer of all EBTs using Aadhaar Payments Bridge Standard platform approach thus reducing coordination costs Interoperable cash withdrawal points using Aadhaar authentication service offered as a public good

Aadhaar Payments Bridge The Aadhaar Payments Bridge has already been deployed by the National Payments Corporation of India. The Aadhaar Payments Bridge can handle crores of transactions on a daily basis. Government of India Sponsor Bank Or India Post State Governments Aadhaar Payments Bridge Oil Marketing Companies Existing Account Aadhaar + Employers Aadhaar Account 8384 8239 5837 27390239 4390 9203 9593 397802232 Family

All G2P payments into one account Multiple Schemes Aadhaar Payments Bridge (with Account Mapper) One Aadhaar linked account

Interoperable cash withdrawal points Bank branches and Post Offices 2,50,000 1,00,000 ATMs POS terminals 5,00,000 Aadhaar-enabled MicroATMs Over 10,00,000 by 2014 Banking through Mobile phones, Internet Any where, any time access 60,00,00,000

MicroATM network at the grassroots level With MicroATMs, any Aadhaar holder can: Withdraw money Deposit money Send and receive remittances Over 10 lakh locations where microATMs can be deployed: 1,00,000 Bank branches 1,50,000 Post Offices 4,00,000 Fair Price shops 1,50,000 Fertilizer shops 1,00,000 Citizen Service Centres 1,00,000 PACS 25,000 petrol stations 10,00,000 kirana shops

Advantages of AEPS Beneficiary can receive money at doorstep Inter-operable system thereby ensuring customer is not tied to one bank’s BC Network of BCs, bank branches and Post Office can leverage a single biometric authentication system accessible through microATMs Efficiency in public expenditure as no need for banks to separately capture biometrics and develop their own de-duplication and Authentication systems

Aadhaar Authentication Aadhaar Authentication service validates the identity of the Aadhaar holder using fingerprint, iris and mobile based authentication methods. The UIDAI has built an Aadhaar authentication system that can service millions of authentications on a daily basis. The Aadhaar system is a first worldwide, due to the challenges of biometric technology at such scale. Online authentication makes it possible for Government and Banks to focus on service delivery rather than tinker with biometric technology.

End-to-end transparency and accountability Aadhaar linkage in the Government and Bank databases provides end-to-end visibility of subsidy and benefits payments from Government to the beneficiaries. Government Bank Customer Service Point Aadhaar MicroATM 8384 8239 5837 736509 4390 9203 9593 583902 Aadhaar Pension ID 8384 8239 5837 3883923 4390 9203 9593 8592374 Aadhaar Account 8384 8239 5837 27390239 4390 9203 9593 397802232

Advantages of APB to Departments Removes fakes/ duplicates from the beneficiaries list leading to savings Eases the entire process for transferring benefits as the Govt. just needs to know the Aadhaar numbers of the beneficiaries without seeding bank account details in every scheme database Eliminate Errors/Frauds as the resident is in control of his data at both ends (Department and Bank). Direct linking ( of Domain ID with Bank Account) without Aadhaar is a non-trivial problem. Ensures Scalability as each scheme does not require to populate their database with bank account details. APB is a platform Bank account changes do not affect the transfer systems for various schemes Resident-centric view of payments under various schemes. This will enable weeding out those people who may be availing LPG as well as Kerosene subsidy and benefits of multiple schemes. Digital audit trail & Transparency Real time monitoring and efficient funds & program management

Advantage of APB to Beneficiaries No need to open multiple accounts. Just open one and link it to Aadhaar. Residents more comfortable in disclosing only the Aadhaar number to Govt. Agencies ( e.g. LPG Dealers) rather than bank account details In case of change in bank account, resident does not need to convey account details or change in bank details to each department that he deals with

EBTs using Aadhaar – a snapshot 1111 2222 3333 Enroll for Aadhaar Provide Aadhaar to agencies/bank Link Aadhaar Aadhaar Enabled Bank Accounts (AEBA) Aadhaar Enabled Payment System (AEPS) Aadhaar Payment Bridge (APB) Digitize data Link Aadhaar Open / link AEBA Appoint BCs and roll out AEPS

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