Aadhaar link mandatory for card transactions at merchant location
Mumbai: The Reserve Bank of India has made it mandatory for banks to implement Aadhaarauthentication 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
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