Indian banks have warned that it is unlikely that merchants will be able to install new PoS terminals that can link to Aadhaar-based biometric authentication before a government deadline.
The central bank said earlier this year that it is mandatory for all banks to install the PoS terminals to facilitate secure transactions. However, industry experts have said to Indian media that there is a lack of information on exactly how this should be implemented.
“There is no clarity as to how the transaction will flow, if the customer will need to swipe his card, punch the Aadhaar number or whether the biometrics will act as the second factor of authentication. Unless these intricacies are cleared, PoS manufacturers cannot develop Aadhaar-enabled PoS machines within the mentioned deadline,“ said Manish Patel, founder of Mswipe which manufactures mobile PoS terminals, told the Economic Times.
“I believe that a pilot needs to be done which can help the system to slowly gear up to the big change. A terminal works in tandem with a bank, the payments switch as well as the manufacturer. I believe it re quires readiness from all levels,“ said Lokvir Kapoor, chief executive officer at PineLabs which also manu factures point of sales terminals.
Other industry insiders said the existing machines will take a long time to be replaced: “It is the incremental engagement that is getting secured, but the existing inventory also needs to be updated in order to eliminate the chances of data breach,” said Puneet Kapoor, senior executive vice-president at Kotak Mahindra Bank, to LiveMint.
“It will take some time before we reach a position where we can say that we have really optimized the opportunity of biometric authentication.” But others are more hopeful and supportive of the cause. “Biometric-enabled PoS machines are also expected to ease the experience of financial transactions for a large number of users and it also ensures higher security levels,” Pai added.
“This will spur a gradual adoption of such infrastructure throughout the ecosystem, and eventually we are likely to see only biometric-enabled infrastructure to be present for card acceptance with older devices being replaced.”