Is the future of payments happening in India now?

by | Oct 5, 2017 | Payments

India Makes Important Advances in Biometric Payments

 

In India it’s already possible for a consumer to authorise and authenticate a payment with their fingerprint or iris scan. As a largely cash based economy India has leapfrogged the use of Cards and Smart Phones for point of sale (POS) payments. Will biometric payments become more popular?

 

Move away from cash

 

There was a lot of press attention when the Indian Government banned high value cash denominations in an attempt to weed out corruption and bribery.

While the success of the cash ban initiative in curbing corruption is being debated there is another potentially more impactful initiative that has been rolled out by the Indian Government.

 

Compulsory biometric authentication

 

The Indian government is rolling out a compulsory biometric authentication database. There will of course be discussions about the privacy concerns around a biometric database for residents. However such a technology has the potential to leapfrog many payment infrastructures and protocols to a simple country and resident wide biometric payment system.

 

How does it work

 

By 31 December 2017 each bank account in India must have a resident number associated with it. Resident numbers can be obtained easily at many outlets around the country by simply providing a fingerprint and/or iris scan. All bank accounts will therefore be linked to biometric data by 31 December 2017.

 

Fingerprint POS devices

 

Retail outlets can replace their existing POS systems with an inexpensive (approximate cost of $30) fingerprint POS devices which link to a smartphone enabled app.

The retailer rings up the amount at the cash register, the consumer simply scans their fingerprint at the POS device and chooses the bank account from which the payment is to be made.

The authentication and transaction data are processed by a central clearing house and the payment amount transferred from the payer to payee.

 

Inexpensive

 

There are no costs to the use of the authentication database or clearinghouse. Individual bank accounts may apply fees for outward or inward remittances however these are regulated and for the most common retail payment amounts (below USD 200) cannot exceed the equivalent of $4 cents, so a maximum total cost of 2 basis points.

 

Limitations

The smartphone enabled app being used by the payee requires an internet connection to reach the clearing house. However it is estimated that 87% of the Indian population is covered by an internet capable mobile network.

 

What about the unbanked?

It’s believed that 19% of the Indian population is still unbanked. However, the Indian Government and the Reserve Bank of India (RBI) have made several concentrated efforts to promote financial inclusion. These efforts include the launch of cooperative banks and regional rural banks (RRBs), introduction of mandated priority sector lending (PSL) targets, formation of self-help groups, appointment of business correspondents by banks to provide door-step delivery of banking services.

The future

Imagine a future where you can leave your house without your wallet, without your phone and shop just with your fingerprint. Imagine that to make this payment costs a total not more than 2 basis points and that the payment is instantaneous.

This future is happening in India now.

4 Comments

  1. Michael Schiessl

    I’m impressed and I believe this can work for other countries as well. But only if the government in these countries will lead this. If Banks or independent institutions haven’t to apply to it it it will fail. my personal opinion.

    Reply
    • Jeannie Gorissen

      Hi Michael, indeed. Achieving a nation-wide roll-out without governmental backing or leadership does present a whole set of different challenges. Thank you for your comment. We will follow the developments in India and update our post when new insights arise on how this could work elsewhere.

      Reply
  2. Emma

    This is a great initiative and fantastic way to roll out alternative payments where infrastructure is lacking.
    However it concerns me to think about the implications that fraud could have on this system. If a fingerprint can be cloned, then it will be compromised forever. Bank account details, address, PIN number etc can all be changed if necessary, a fingerprint is indelible.
    Are there any initiatives to fight issues along these lines before they become prevalent?

    Reply
    • Manoj Kheerbat

      It’s a good point Emma. We have not seen initiatives to address the possible cloning or forging of indelible biometric data like fingerprints. If we come across something we’ll be sure to update this discussion string and would appreciate it if you would do the same. Thanks!

      Reply

Submit a Comment

Your email address will not be published. Required fields are marked *

About

Gropay provides management consulting and interim management services globally in the areas of online payments, mobile payments and point of sale POS payments. Our clients span the entire payments value chain from schemes to merchants and also include private equity investors, technology and mobile companies. The Gropay team consists of proven industry leaders with extensive experience both on the demand (merchant) and supply (Payment Service Provider, acquirer, scheme) sides with a focus on sales and business development, operations, risk, compliance, valuation and due diligence.

Visit our homepage

YOU MIGHT ALSO LIKE

GDPR for Payments

GDPR for Payments GDPR is an important EU wide regulatory mandate. It provides increased protection of individual privacy and gives individuals more control over the information they share. In our view GDPR is an important element of building a scalable data centric...

read more
US Supreme Court repeal of PASPA

US Supreme Court repeal of PASPA

US Supreme Court repeal of PASPA On Monday, May 14, 2018, the Supreme Court of the United States held in the Murphy v. National Collegiate Athletic Association case that the federal Professional and Amateur Sports Protection Act (“PASPA”) violated the Tenth Amendment...

read more
Gropay’s 5 Tips For The Holiday Season!

Gropay’s 5 Tips For The Holiday Season!

GROPAY'S 5 TIPS FOR THE HOLIDAY SEASON With all the preparations for the holiday, last week deadlines, the multitude of drinks, parties, last minute shopping as well as high expectations from family and friends, it is easy to get lost in this busy time before the...

read more
How Do Bitcoins Impact Online Merchants?

How Do Bitcoins Impact Online Merchants?

How do bitcoins impact online merchants? There’s a lot that has been said and written about bitcoins. They are the talk of the town these days. Undoubtedly bitcoins and related distributed ledger technologies will have a lasting impact on payments and financial...

read more
PSD2 What Will Really Change?

PSD2 What Will Really Change?

PSD2 What Will Really Change? There has been a lot written about the PSD2 and rightly so, it is important regulation soon to be enacted into legislation that will bring significant innovation and change to electronic payments. But what will actually change in the day...

read more
SafeCharge Three Years After IPO

SafeCharge Three Years After IPO

SafeCharge 3 Years After IPO In this post we look at SafeCharge, a medium sized payment processor and recently formed acquirer. We look at the following items; history, the IPO, recent performance, drivers of growth so far, recent strategic moves and execution...

read more
The Stamina Of Clinton Or Trump?

The Stamina Of Clinton Or Trump?

The Stamina of Clinton Or Trump There have been lot of comments made by presidential candidate Donald Trump triggering a lot of media attention and public debates recently. Not the most notorious comment, but still one that made me pause in the work I was doing....

read more
GDPR – Data Protection Gets Serious

GDPR – Data Protection Gets Serious

GDPR - Data Protection Gets Serious On 14 April 2016, the EU Parliament adopted the long awaited General Data Protection Regulation (GDPR) The GDPR will have considerable impact on all companies that provide goods or services to Europe, regardless of the company’s...

read more
Authentication – Payer! Reveal Thyself

Authentication – Payer! Reveal Thyself

Authentication - Payer! Reveal Thyself EPC releases results of latest consultations for e-mandate today: what does this mean for authentication and your online business? Earlier today, 5 April 2016, the European Payments Council (EPC) announced the launch of the...

read more
Fantasy Sports – It’s All A Fantasy

Fantasy Sports – It’s All A Fantasy

Fantasy Sports - It's All A Fantasy Fantasy Sports continue to gain popularity California recently introduced a bill to allow online sports betting. The motivation of this bill is believed to be the increasing popularity of fantasy sports. Although, the bill has yet...

read more
Cash – Kicking The Habit

Cash – Kicking The Habit

Cash - Kicking The Habit There was an interesting article in The Economist recently about strikes on the London Underground (Tube). Such strikes are commonly believed to have a short term net cost to the economy. However the article quoted a study by Oxford and...

read more
Data Protection – To Russia With Love

Data Protection – To Russia With Love

Data Protection - To Russia With Love Data Protection Russia Russia’s new data protection law came into effect on the 1st of September 2015. It’s now required by law to store personal details of Russian citizens on servers physically located in Russia. Copies of the...

read more

Dressing For Work – Looking The Part

I had a manager once who was a real mover and shaker in HR, brilliant in strategy and amazing to work with. Although visionary in his business outlook, there were some basic things that could really set him off when meeting new people: things like scruffy shoes. You...

read more

Tattoos – Ink At Work

Are Tattoos ever OK at work? I was HR Director at a large organization when I suddenly completely got caught by a curb ball thrown by one of my main stakeholders. “What is our HR policy on tattoos?”  I had to take a two second pause before responding with a gigantic...

read more

Wirecard’s $9 Billion Bid For Worldpay

Wirecard with a market value of $ 5.2 billion made a $9 billion bid for Worldpay. Is this a serious bid? What will Wirecard do with Worldpay? Wirecard has extensive experience with M&A and also in acquiring companies larger than itself and making it a success; as many...

read more

Changing Jobs – Stay Or Go?

Changing jobs - How long should you stay in your current job? In this day and age, most employees are not even aware that organisations used to have tenure incentives like a fancy watch, a toaster or at least a bunch of flowers when you reached your 20 or 25 years of...

read more

Distracted Living – A Simple Life

Distracted Living Psychology Today published an interesting blog on distracted living. Distracted living is where you miss out on much of your life because you generally aren’t paying attention, or your attention is so torn in many directions that your really do not...

read more

Is Visa Worried About Paypal?

Is Visa worried about Paypal? Visa recently published a report on Visa Checkout in which they stated that Visa Checkout delivers 17% better conversion than Paypal. One of the interesting points about this report is that Visa considers Paypal as enough of a threat to...

read more

Mergers And Acquisitions

How do I deal with my company going through a merger or acquisition? Working in the payments sector? There is a big chance that your company is engaged in a merger, is taking over another company or is about to become an acquisition. 2014 was a big year for payments...

read more

FOLLOW GROPAY

Pin It on Pinterest

Share This