New Delhi: With less than two months left to meet the deadline set by the Reserve Bank of India (RBI) for banks to roll out Aadhaar-enabled point-of-sales (PoS) terminals, industry experts say the capacity to produce such machines falls short of demand.
On 29 September, RBI had issued a circular stating that Aadhaar-enabled PoS terminals and ATMs were to be mandatorily installed by January of 2017. The deadline was extended by six months to 30 June given the slow rate of deployment of infrastructure.
“It has been brought to our notice that the rate of deployment of acceptance infrastructure has slowed down owing to the mismatch between demand and supply of such Aadhaar-enabled devices. It has been decided to extend the time for deployment of Aadhaar-enabled devices till June 30, 2017," said a notification released by RBI on 2 December.
The building blocks to meet the mismatch between demand and supply of Aadhaar-enabled devices are still not in place, industry experts say, adding that it will still be a challenge to meet the new deadline.
“It takes time to build technology. The standards are still being developed by NPCI (National Payments Corporation of India); even the development and certificate of software takes time which is very essential for the implementation of biometric authentication in new PoS machines," Dewang Neralla, CEO of Atom Technologies Ltd, a payment services provider.
According to Ramaswamy Venkatachalam, managing director, India and South Asia, FIS, a US-based banking technology-provider, the cost of software needed to process biometric-based payments is the real concern for banks.
“If you are not using a PIN (personal identification number), instead using the biometrics, the ATM (automated teller machine) switch has to be converted to be able to understand the language. To understand this language, the ATM manufacturer puts a small piece of software that sits along with the biometric reader… The real cost to banks is the cost of the software, imagine this software goes into all the thousands of ATMs being set by them to support biometric payments," he said.
The trace and audit part also becomes complex because if an authentication goes wrong, it will be difficult to trace where it went wrong because bank is not the only entity involved in the transaction, he added.
Delta ID Inc., an iris scan technology developer, is in talks with some banks for use of its software in PoS terminals and ATMs.
“As far as iris-enabled PoS devices are concerned, we expect the supply side to improve, but still remain below the aspired levels by the new timelines. However, some of the banks have already tried or are in trials of implementing biometric enabled acceptance infrastructure with existing iris-enabled devices," said Vivek Khandelwal, vice-president of business development at Delta ID.
The issue is not a technology roadblock, but just the time and effort that go into completing the process of design, implementation, testing and certification of devices, he added.
A.P. Hota, managing director and chief executive officer of NPCI, said in a recent interview that in the past three to four months, 150,000 such terminals had come up owing to the push by the government.
“Nabard (National Bank for Agriculture and Rural Development) will be giving incentives to banks to reimburse the cost of terminals to the extent of Rs6,000 per terminal. This will be applicable for terminals deployed in tier-5 and 6 centres," he said.
The decision to use Aadhaar as an effective alternative for additional authentication of domestic card transactions came on the recommendation of a working group established by RBI.