The Prime Minister, Narendra Modi, scrapped 500 and 1000 rupee notes on November 6th 2016. This move called demonetization has destroyed corruption and black money in the economy. Terrorism in India has been stopped in its tracks. Another clear benefit of demonetization is the move to go cashless. When all citizens of our country use debit/credit cards, mobile wallets, Aadhaar enabled payments, BHIM App, UPI and other digital methods to make transactions, India will become a cashless economy.
A 12-digit unique identification number has been issued by the Government of India, as an identity for every citizen of the country. More than a Billion citizens have already enrolled on the Aadhaar platform. But, is the 12 digit Aadhaar just an identity number? No, it’s much more than that. Using Aadhaar enabled payment systems (AEPS), you can make payments for your purchases, just by using your fingerprints. You don’t require a debit/credit card to make a payment, if the merchant at whose store you make a purchase, has Aadhaar enabled payment system.
It’s nothing but a Smart Phone with internet connection, attached to a finger print scanner. Your Aadhaar number must be seeded/linked to your bank account. The merchant enters the amount you have to pay and you authenticate it, using your fingerprints. Money moves from your account to the merchant’s bank account. Now to the big question, Is your money safe with Aadhaar based payments?
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Aadhaar Based Payments can be a double-edged sword
Aadhaar authenticates your payments using biometrics (fingerprints), to make paying for your purchases, an easy and hassle free experience. Yes, there’s the convenience of using Aadhaar based payments. But there’s a small problem. Is Aadhaar enabled payment system foolproof?
UIDAI (Unique Identification Authority of India), is the Government Agency, which is the issuing authority for Aadhaar. UIDAI recently detected an Aadhaar biometric data breach, where multiple transactions were done, using the same fingerprint. UIDAI filed a complaint with the Delhi Police, against Axis bank, Suvidhaa Infoserve and eMudhra, for storing biometric data which is against the rules.
Now, Aadhaar enabled payments are build on a platform, which is Aadhaar. If Aadhaar is vulnerable to hackers, then Aadhaar enabled payments a payment system which is build on Aadhaar, is also vulnerable and you can lose money.
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The Aadhaar Based Payment Systems may be vulnerable to the gummy finger method. Using gummy finger method your duplicate fingerprint can be made, just by using gum/glue. A fraudster can make a transaction using your fingerprints and you can lose money. Cloning a debit/credit card is not very easy, but the gummy finger method where you need just gum/glue, makes Aadhaar Based Payment Systems vulnerable to fraud.
A highly sensitive scanner can easily defeat the gummy finger method, but it could also make the device more expensive. An expensive scanner could mean, less interest from merchants to install Aadhaar Based Payment Systems.
The merchant uses the Aadhaar enabled payment system, to authenticate your fingerprints. Your biometric data could be stored on this device or the merchant can store your biometric data on his smart phone. This makes you vulnerable to fraud.
Yes, Aadhaar based payments can be a game changer and promote financial inclusion in India. With Aadhaar based payments, you can pay, just by using your fingerprints. But, the vulnerabilities of the system must be looked into. Aadhaar based payments must be made fool proof.
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