MUMBAI: Will banks have to spend a fortune to give customers the choice
of either putting their finger prints or swiping plastic cards to
withdraw money from ATMs and pay for purchases?
Not really, says the Unique Identification Authority of India (UIDAI),
the agency that issues the 12-digit Aadhaar numbers and is pushing for biometric authentication for
credit card and ATM transactions. But bankers disagree. Besides the
travails and risks of a new technology, upgrading each and every
automated teller machine and point of sale terminal at thousands of
merchant outlets will not come cheap, they argue.
Indeed, 'cost' is emerging as one of the issues in the brewing debate -
'Aadhaar or plastic cards'. According to a source familiar with the
subject, an RBI-constituted panel has pegged the cost of banks'
readiness for Aadhaar at 4,259 crore compared with 3,556 crore thebanking industry has to spend to upgrade machines to match a different technology they think lowers the risk of card frauds.
It's learnt that the UIDAI nominee
on the panel is likely to issue a dissent note on the estimates the
agency believes is significantly higher than what banks' migration to
Aadhaar would cost.
About a fortnight ago, the findings of the report were shared by Pulak
Kumar Sinha, the SBI general manager who heads the panel, at a luncheon
meeting with RBI Deputy Governor HR Khan. Other members of the working group were also present at the meeting.
Cost the only point of conflict
According to a UIDAI spokesman, other than cost estimates, there is no
other point on which UIDAI or any other member is in disagreement.
Responding to ET's queries, Ashok Pal Singh, deputy director general,
UIDAI, said nowhere does the report suggest that Aadhaar, in its current
shape and form, is not recommended for large-scale adoption for the
existing card base as an additional factor of authentication.
"If need be, UIDAI will put a dissenting note by way of a disclaimer on
the costing...I repeat that on no other point is UIDAI or any other
member in disagreement with the rest of the draft report," he said.
Asked whether the working group has voiced concerns on account of the
fact that if Aadhaar of a cardholder is compromised, the cardholder's
identity gets compromised for life, the UIDAI official said the report,
which should be in public domain shortly, has not made any such
observation.
The Reserve bank spokesperson did not respond to ET's email query.
UIDAI is of the view that Aadhar-based payment technology can be cost
effective and beneficial as it will take electronic payments to the
masses. "What is this great upgradation cost we are seized about? The
comparison is between cost of deploying a technology that has peaked
(chip and pin) versus a technology making its debut (Aadhaar-based
biometric authentication) and yet to acquire economies of scale... The
number of PoS terminals in the country is a pittance. A card does not
get accepted beyond two dozen major cities. Does anyone seriously
believe the aam aadmi will transact with a chip and pin card? Aadhaar
uses a light PoS with no inbuilt intelligence as authentication takes
place back end and the device is only a communication channel as against
a device that must decode and read a chip. Even common sense will defy
an assertion that the former will require a heavier and more expensive
device," said Singh.
Some of the credit card heads of banks ET spoke to said there was a
distinct possibility that RBI would ask banks to gradually roll out
Aadhaar-based biometric authentication as an additional authentication
for card transactions. "RBI may not mandate banks immediately, but may
nonetheless ask them to upgrade the technology. This is happening at a
time banks are issuing credit and debit cards that are based on EMV
technology," said a banker.
In EMV cards, the card and CVC numbers are encrypted. And, unlike the
EMV or the conventional magnetic stripe technology where cards have to
be swiped, a biometric authentication involves the bank's ATM or PoS
reading the fingerprints and matching them with the fingerprint records
aggregated by authorised authentication service agents like VISA,
National Payments Cop or Vodafone before the transaction is cleared.
Source : http://timesofindia.indiatimes.com/
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