India's digital banking ecosystem is rapidly evolving, with continuous efforts being made to enhance security and protect customers from fraud. As digital transactions increase across the country, especially in rural and semi-urban areas, ensuring safe and reliable banking services has become more important than ever. In line with this objective, the National Payments Corporation of India (NPCI) has introduced a significant update to the Aadhaar Enabled Payment System (AEPS). This new change focuses on strengthening transaction security by adding an extra layer of authentication for higher-value withdrawals. With this update, customers will experience a safer and more secure withdrawal process, helping build greater trust in digital banking services.

This latest update has been introduced to strengthen the security of AEPS transactions across India. By adding Aadhaar OTP verification for higher-value withdrawals, NPCI aims to reduce fraudulent activities, protect customers from unauthorized transactions, and make the AEPS ecosystem more secure and reliable.

How the New AEPS Withdrawal Process Works

For withdrawals exceeding ₹5,000, the transaction process will be as follows:
  • The customer provides their Aadhaar number.
  • The retailer selects the customer's bank.
  • Biometric authentication is complete.
  • An OTP is sent to the mobile number linked with Aadhaar.
  • The customer enters or shares the OTP for verification.
  • The system verifies both biometric data and OTP.
  • The cash withdrawal is successfully processed.
  • This additional verification takes only a few seconds but significantly improves transaction security.

What is the New AePS Update?

As per the latest NPCI guidelines, a new authentication process will apply to AEPS cash withdrawal transactions from July 15, 2026.

For Cash Withdrawals Up to ₹5,000:
  • Only biometric authentication is required.
  • Aadhaar OTP verification is not required.
For Cash Withdrawals Above ₹5,000:
  • Biometric authentication is mandatory.
  • An Aadhaar OTP will be sent to the customer's Aadhaar-linked mobile number.
  • The transaction will be processed only after successful OTP verification.
  • In simple terms, withdrawals above ₹5,000 will now require two-factor authentication biometric verification and Aadhaar OTP to provide an extra layer of security against fraud.

Why has NPCI Introduce Aadhar OTP?

AEPS has become one of India's most trusted banking services, especially in rural and semi-urban areas where banking access is limited. Millions of people rely on AEPS every day to withdraw cash, check balances, and access banking services. However, with increasing digital adoption, cases of biometric misuse and unauthorized transactions have also become a concern.

To address these risks, NPCI has introduced Aadhaar OTP verification as an extra layer of security for higher-value transactions.

The objective is simple:
  • Prevent unauthorized withdrawals.
  • Protect customers from fraud.
  • Increase confidence in AEPS services.
  • Strengthen the security of India's digital payment ecosystem.

Who Will Be Affected?

The new guideline applies to everyone involved in AEPS transactions, including:
  • AEPS customers.
  • Retailers.
  • Banking Correspondents (BCs).
  • Customer Service Points (CSPs).
  • Banks providing AEPS services.
  • Fintech companies offering AEPS solutions.
  • Retailers should start informing customers before the implementation date to ensure a smooth transition.

What Customers Should Do Before July 15, 2026

To avoid any inconvenience during cash withdrawals, customers should:
  • Verify that their mobile number is linked to their Aadhaar.
  • Carry the registered mobile phone while visiting an AEPS retailer.
  • Never share OTPs with unknown individuals.
  • Update Aadhaar details if the registered mobile number has changed.
  • Customers without access to their Aadhaar-linked mobile number may not be able to complete withdrawals above ₹5,000 until their details are updated.

Enhanced Security with Real-Time Split Transaction Detection

Our advanced fraud detection system continuously monitors AEPS transactions in real time to identify suspicious split transaction patterns before they can cause financial loss. By analyzing transaction amounts, frequency, timing, customer behavior, and merchant activity, the system can detect attempts to bypass transaction limits by splitting a large withdrawal into multiple smaller transactions.

When unusual or high-risk activity is identified, instant alerts are generated, allowing timely intervention and reducing the chances of fraudulent withdrawals. This proactive approach not only protects customers and retailers from financial fraud but also strengthens compliance with evolving regulatory and security standards. With intelligent real-time monitoring and risk analysis, financial institutions, fintech providers, and AEPS retailers can deliver a safer, more reliable, and trustworthy banking experience while maintaining the integrity of every transaction.

What AEPS Retailers Need to Know

AEPS retailers play a key role in ensuring smooth and secure transactions. From July 15, 2026, cash withdrawals above ₹5,000 will require customers to complete a two-step verification process using biometric authentication and Aadhaar OTP verification. Retailers should be familiar with this update and guide customers through the new process for a seamless transaction experience.

To ensure smooth transactions, retailers should:
  • Inform customers about the mandatory OTP requirement.
  • Verify that customers have access to their Aadhaar-linked mobile number.
  • Guide customers through the OTP verification process.
  • Keep AEPS applications and devices updated as per their service provider's requirements.
  • By staying informed and educating customers, retailers can reduce transaction failures, enhance security, and provide a seamless AEPS banking experience.

Benefits of the New AEPS Security Update

The new OTP-based verification offers several advantages:
  • Better protection against fraudulent transactions. 
  • Greater security for customers. Increased trust in AEPS services. 
  • Reduced chances of unauthorized biometric misuse. 
  • Stronger compliance with digital payment security standards. 
  • Although the transaction process now includes one additional step, the enhanced protection makes it worthwhile.

Frequently Asked Questions (FAQs)

1. Is OTP mandatory for every AEPS transaction?
: No, Aadhaar OTP is required only for AEPS cash withdrawals above ₹5,000.

2. Is biometric authentication still required?
: Yes, biometric authentication remains compulsory. OTP acts as an additional verification step for higher-value withdrawals.

3. What if my Aadhaar mobile number is not active?
: If you cannot receive the OTP on your Aadhaar-linked mobile number, the transaction above ₹5,000 cannot be completed. You should update your Aadhaar mobile number before making such withdrawals.

4. Does this rule apply from July 15, 2026?
: Yes, the new NPCI guideline will be implemented from July 15, 2026.

Final Thoughts

The introduction of Aadhaar OTP verification for AEPS cash withdrawals above ₹5,000 is a significant step toward making digital banking more secure. While customers will need to spend a few extra seconds completing OTP verification, additional security helps protect their money and reduces the risk of fraudulent transactions.

For AEPS retailers, Banking Correspondents, and fintech partners, this update is an opportunity to educate customers and build greater trust in digital banking services. As the implementation date approaches, staying informed and prepared will ensure that AEPS transactions continue to remain smooth, secure, and reliable.