While the chip and pin is a tested technology, Aadhaar based option is cheaper, says D. Subba Rao

Reserve Bank of India Governor D. Subba Rao has underlined the need for taking a decision on the choice between migrating to EMV (Europay-MasterCard-Visa) with chip and pin and an Aadhaar-based biometric authentication.

The chip and pin is an established and tested technology, but is relatively expensive. The Aadhaar based option is cheaper, but the robustness of the technology is as yet unproven. “If indeed we are finally able to marry Aadhaar into the cards, we will be achieving same level of security available in chip and pin model at a much lower cost,” he said.

Dr. Subba Rao was speaking on the topic “Indian Payment and Settlement Systems: Responsible Innovation and Regulation” at the Institute for Development and Research in Banking Technologies here on Friday. Aadhaar was recognised as an alternate authentication mechanism in payment systems and Aadhaar based payment products had already been designed and introduced.

Aadhaar Enabled Payment Systems was aligned with the UIDAI’s plan to utilise the UID number for routing all the Government benefit transfer payments to beneficiaries. AEPS was a bank-led model allowing online transaction through the business correspondent of the respective bank using the Aadhaar identification.

He said the Aadhaar Payment Bridge System was a centralised electronic benefit transfer facilitating disbursement of benefits to the bank accounts of the beneficiaries linked to their Aadhaar numbers. Such transfer would enable secure and efficient disbursal of benefits to intended beneficiaries which, in turn, help in reducing the administrative costs as well as leakages for the government.

“This will also further financial inclusion by bringing the beneficiary households into the banking fold,” he said.