The Reserve Bank of India (RBI) has made it mandatory for banks to
implement AADHAAR authentication for card transactions at merchant locations.
The central bank RBI said all new cards 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, 2013 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 Identity Authority of India that issues the
AADHAAR number.
The RBIs 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.
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