Home / Industry / Banking /  Adopt Aadhaar authentication for card-based transactions, RBI advises banks

New Delhi: On a day when the Supreme Court issued notices to states which have made Aadhaar cards compulsory for availing government schemes, the Reserve Bank of India asked banks to ensure that new card payment infrastructure are able to authenticate transactions using Aadhaar-linked biometrics.

“All new card present infrastructure has to be enabled for both EMV chip and PIN and Aadhaar (biometric validation) acceptance," the Reserve Bank of India said in a notification on Tuesday.

Euro pay MasterCard Visa or EMV chip and PIN authentication involves card information stored in a chip that is accessible through a PIN or personal identification number, which replaces a cardholder’s signature.

The central bank notification left it to banks to take a decision on whether they should adopt Aadhaar as an additional authentication factor or use EMV Chip and PIN technology for securing the card payment infrastructure, for cards that RBI has not specifically asked banks to use EMV norms.

Representatives of both the Unique Identification Authority of India, which manages the repository of biometrics linked with the unique identity number it issues, and Visa Inc., one of the initial contributors to the EMV system, said the Reserve Bank of India notification leaves the choice to the customer on whether they want to go with EMV or with Aadhaar.

An increase in the number of cases of fraud because of stolen card data through card skimming and counterfeiting had prompted Reserve Bank of India to form a panel to look into securing card-based transactions through additional layers of authentification, such as PINs and biometrics in March 2011.

The current notification is based on the recommendations of the working group headed by Gowri Mukherjee, global head of digital marketing at Standard Chartered Bank.

Meanwhile, a bench headed by Justice B.S. Chauhan, while hearing a public interest litigation, issued notices on Tuesday to states including Delhi, Maharashtra, Rajasthan and Kerala.

The hearing comes in the light of a Public Interest Litigation (PIL) filed by a former Karnataka high court judge K.S. Puttaswamy, challenging the linking of welfare payments to Aadhaar cards under the government’s direct benefit transfer scheme.

In an interim order, the Supreme Court had on 23 September said that no one should suffer for not having Aadhaar numbers.

Uttam Nayak, group country manager, India and South Asia at Visa Consolidated Support Services (India) Pvt. Ltd said, “RBI has been pragmatic in mandating it incrementally as it is giving Aadhaar a runway to evolve in terms of operations, use cases, risk, technology standards, dispute resolution and get these things in order. Because Aadhaar is tokenless and doesn’t need a card, it has great potential for inclusion."

However, Nayak said, “It is not clear from when this is effective, but ATM and point-of-sale infrastructure providers have to be ready. Today, ATMs don’t even have EMV, so it needs to be seen if there are enough suppliers for providing infrastructure that is both Aadhaar-linked biometric and EMV chip and PIN enabled".

Unique identification Authority of India deputy director general A.P. Singh said, “This is just what we wanted because the notification means all the new and replacement point of sale infrastructure will be able to use both Aadhaar-linked biometrics and EMV chip and PIN."

“We had never been for a mandatory move to Aadhaar and believe that in due course, banks will find it a more appropriate and cost-effective solution for authentication," Singh said.

PTI contributed to this story.

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