[Reader-list] Plastic is out, fingerprints are in

[Taha Mehmood]

http://www.business-standard.com/india/storypage.php?autono=348623


	
Plastic is out, fingerprints are in
Niladri Bhattacharya / Mumbai February 11, 2009, 0:50 IST

Smart cards have been outsmarted as the country's largest lender,
State Bank of India (SBI), has come up with a card-less transactions
that requires only an account holder's fingerprints.

he bank has decided to dispense with cards to lower the cost of
transactions, particularly for the disbursement of social security
pensions and wages under the National Rural Employment Guarantee
Scheme (NREGS).

Under the new system, which is been implemented across the country, a
point of sale (POS) machine, comprising bio-metric details of account
holders would go to a particular village where the bank's customers
can withdraw or deposit funds using the fingerprint-based method.

Earlier, each account holder was given a card with a magnetic strip
that was swiped at the POS machine before any transaction. The price
of a smart card depended on its memory. For instance, 4GB cards cost
Rs 75, whereas it costs Rs 140 for a 32GB card.

Since the inception of the NREGS in 2004, SBI had disbursed around 1.6
million smart cards across the country, before deciding to shift to
the new system a couple of months ago. "In the last two months, we
have opened more than 400,000 accounts but we have not disbursed any
smart cards thereby saving close to Rs 3 crore," said S Mukhopadhyay,
deputy general manager in the bank's rural banking department.

What has also helped the bank roll out the new system is the fact that
2 per cent of the no-frills account holders stepped out of their
villages. Since most of the account holders only accessed the bank to
receive the pension or the NREGS payment, a banking correspondent
could easily go with a POS machine at periodic intervals to help them
complete their transactions.

"These villagers do not require inter-operability, which a smart card
offers, since most of them use their accounts only once a month to
avail of the NREG scheme, practically the accounts remained dormant
for the rest of the month. Therefore, it was not cost-effective for
the banks to carry on with cards," an SBI executive said.

Other banks, however, have not shifted to card-less transactions.
"Different banks use different technologies and we are sticking to a
card-based system, at least for the time being," said an executive at
a public sector bank executive. The cost-saving is not significant,
added another banker.