Key Facts

• 40% of all first-time transactions fail.
• Orissa had the least failure rate (32%) and Haryana had the maximum failure rate (49%)
• 69% of the failures are due to customer-specific reasons-Aadhaar not seeded to bank account and mobile number.
• Proportion of failures due to customer -specific reasons ranges from 56% in Maharashtra to 75% in UP and Bihar

Summary

Aadhaar Enabled Payment System (AePS) allows a bank customer to use Aadhaar as an identity to access his/ her respective Aadhaar enabled bank account and perform basic banking transactions like balance enquiry, cash deposit, cash withdrawal and non-financial services like balance enquiry, e-KYC and Aadhaar Seeding. It plays a major role in last-mile connectivity by facilitating disbursement of Government entitlements.

In this data brief, we categorize failure reasons of Aadhaar Enabled Payment System to understand the major deterrent to financial inclusion via Aadhaar Enabled Payment System using daily transaction level data for around 6 lakh customers for 31 months, from December 2014 to June 2017 for 11 states. We also analyze geographical patterns in failure.

We observe inter-state disparity in first-time transaction failure rates where Orissa had the least failure rate (32%) and Haryana had the maximum failure rate (49%). After categorizing the failure reasons, we find that the major reason for failures of first-time AePS transactions is ‘Aadhaar and Mobile number not seeded to Bank account’, ‘Insufficient funds’ etc.