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Aadhaar, EMV face off: Is the UIDAI creating problems for banks?

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Abhigna
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MUMBAI, INDIA: A group of bankers will decide on the appropriate payment technology for the Indian banking system and retail consumers in a month's time.

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The group of Bankers will decide whether EMV (a joint initiative between Europay, Mastercard and Visa) - an internationally accepted technology standard for authenticating credit card, debit card and ATM transactions or Aadhaar will the payment technology for the Indian Banking System in future.

A year ago, Reserve Bank of India, Governor, D. Subba Rao has underlined the need to decide 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, as per D. Subba Rao.

Due to the growing rate of credit card frauds, data thefts and card cloning, some of the private banks are in the process of upgrading their systems to EMV standards. But banks will have to change their banking systems and procure biometric machines, if the group constituted by the Reserve Bank of India, prefers, Aadhaar.

As per an Economic Times report, Bankers, however, are reluctant to spell out their stand openly because the government thinks Aadhaar can be a game changer in disbursing subsidies to people in far-flung regions.