Reserve Bank of India is making life tough for Indian banks, especially the ones who issue credit cards to customers. According to a new notification, RBI has told banks that the bank credit card swipe machines will need to have biometric scanners that will support Aadhar biometric authentication.
Yes, India does have serious issues in regards to frauds that keep surfacing when it comes to national and international credit card transactions. Few months back, RBI has been coming up with various initiatives to curb these frauds, including putting a limit on international daily transactions and introducing “Chip & Pin” type of card payment authentication.
However, making biometric authentication mandatory for payments is taking it bit too far. For this, Banks will not only have to overhaul their card swipe machines, but also their backend Infrastructure to support biometric authentication.
Issues With Implementing Biometric Authentication
Apart from overhauling the swiping machines at PoS and Infrastructure, there are quite a few other issues with biometric authentication
1) Connectivity & Data Transfer: First and foremost, for biometric authentication, the image of person’s fingers will be need to send to centralized servers. Now, given it is an image the connectivity between POS and authentication servers needs to be stable and good. Even though we have 3G connectivity, the quality of connection is many places is still quite bad. If connectivity is questionable, then the transactions are bound to fail.
2) Issues with Biometric Readers: If you have visited the Aadhar centres for getting your Aadhar card, you will know that biometric readers do not work well 100% of times. Infact, with most people they need to give their finger impressions multiple times for it to work properly. And sometimes, it does not recognize finger impressions at all. It is very much possible that customers may end up spending quite a lot of time to achieve success validation.
3) Swipe Machines have to be portable: Portability will be the key, as customers will need the swipe machine close to hand for offering finger impressions. Think about a place like Petrol pump. Without portability, these biometric swipe machines may not be too useful
4) Everyone does not have Aadhar Card: This I think is the biggest issue – Many Indians are still not convinced about Aadhar, and they have not yet even applied for it. Now, a person who does not have Aadhar card will not even be able to use his or her credit card if that’s the case.
Has RBI made Aadhar Card Mandatory?
There seems to be some confusion over this. We tried to find the RBI circular in this regards, but could not get our hands on it.
According to RBI press release, “In respect of cards, not specifically mandated by RBI to adopt EMV (chip) norms, banks may take a decision whether they should adopt Aadhaar as additional factor of authentication or move to EMV chip and pin technology for securing the present payment infrastructure,”
In my understanding what this means is – Credit cards, which compulsorily need to use Chip & Pin will need to go in for Aadhaar biometric authentication, however, domestic use debit cards can choose to remain on chip & pin authentication.
However, going forward all the swipe and pay Infrastructure will need to be enabled for EMV chip and pin as well as Aadhaar biometric validation.
One thing is sure, Banks are going to incur lot of cost for building new infrastructure and I hope that its burden is not put on consumers!