Mumbai:
The Reserve Bank of India has made it mandatory for banks to implement Aadhaar authentication for card transactions at merchant locations.
The central bank said “all new card’s
present infrastructure” has to be enabled for recent security measures, including an embedded EMV chip and a
mandatory PIN, besides Aadhaar validation at point of sale (PoS) terminals.
Aadhaar
is currently used by banks to establish identity while opening bank accounts,
which can then be used to make sure that subsidy payments
are
routed directly to beneficiaries.
RBI had directed banks to issue chip-based cards by November 30
to tackle rising fraud.
The latest directive could mean additional expenditure for banks
as they put in place the mechanism for biometric checks through the system
established by the Unique Identification Authority of India that issues
the Aadhaar number.
“The
RBI’s directive to introduce biometric validation does not make sense,” said
the payments head of
a leading private sector bank, who expressed surprise at the move as banks are
rolling out the EMV chip and PIN system, which he said was in line with best
global practices for securing transactions.
Banks
are issuing or have issued the new cards to customers who have used their
existing cards at an international PoS
terminal, the executive said.
“This facility will be later extended to other customers as
well,” he said. “This new requirement is a challenge as we have very basic
thumb print and reading devices. There is no service provider that manufactures
such machines in bulk.”
Since
the biometric validation is mandatory for new machines, most private banks may
stop installing PoS terminals at merchant outlets,
he said. The worst hit will be public sector banks.
State
Bank of India and Bank of Baroda are
among the large public sector banks that have announced plans to roll out a
large number of PoS machines.
Source-TNN