Biometric authentication cost should not be passed on to customer

Emphasising there was need for a stronger biometric authentication mechanism, Rajya Sabha MP Rajeev Chandrasekhar said cost for addition of infrastructure for this should not be passed on to bank customers.

 

"While there is a need for a much stronger authentication mechanism and customer security — such a proposal, without adequate capital for such massive infrastructure requirement, will result in a high cost burden for the entire banking system, which will ultimately have to be borne by the hundreds of million of account holders in the country," he said.

 

So far, Aadhaar has made no mention of who will bear the cost of biometric PoS readers and ATMs, he said in a letter to the Prime Minister dated September 20.

 

At present, there are 1.2 lakh ATMs and 10.30 lakh credit card swipe or Points of Sales (PoS) machines. Over 2 lakh PoS machines and around 20,000 ATMs are expected to be added by next year across the country.

 

All these new machines would need to have facilities to scan biometrics, which would significantly increase investment costs for both installation and operations, he added.

 

"Public policy towards financial inclusion should be devised intelligently — with objectives of lower banking costs and increased access for consumers — and not using ill-conceived, brute force methods involving significant additional spending and increase in costs to consumers, and please make no mistake, these costs will be passed on the banks to consumers," he said.

 

The real challenge was, however, in the acceptance devices, Chandrasekhar said, adding, the procurement of new equipment to facilitate these biometric checks had huge cost implications on banks, who would ultimately transfer the burden on to customers.

 

Banks would ultimately have to divert funds for developing their businesses to facilitate new infrastructure, he said.

 

Banks who were already reeling under the burden of high operating costs, and customers, who are already burdened by array of 'convenience charges' imposed by banks for online transfers, SMS alerts, etc were understandably wary of the implications of RBI's latest proposal, he added.