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Commentary

Banking: SMS Alert Charts, Fingerprint Scanners on Card Machines, Use Grocery Stores as ATM

SMS Alerts on Usage Basis Only

Banks use SMS alerts to tell you about your account balance, any transactions and so on. These alerts are now charged for by most banks, largely on a fixed-cost basis. Customers with low usage will pay a larger cost, compared to those that use accounts constantly. Banks have been told to charge users on actual usage.

Impact: SMS charges have been increased ever since SMS spam has proliferated. You can easily expect a charge of 10-30 paise per SMS, since banks will add their margin. Hopefully banks will be able to use IP based products instead of SMS in the near future, reducing transaction costs to near zero (using email/Whatsapp/Googlechat/Skype instead of SMS, for instance).

Biometric Aadhaar Based Identification For Card Machines

Sick of entering pins and passwords? You might be able to use a fingerprint or a retina scan soon. RBI has mandated that all new devices deployed by banks as “card present” infrastructure, such as card swiping machines, must have biometric validation of Aadhaar users.

I’m not as concerned about privacy as many are, as I think this will hugely benefit the illiterate, the poor and the old and technology-intimidated. The positives outweigh the negatives. It’s quite likely we get such mechanisms in online stores soon as well – imagine, for instance, that you had a fingerprint reader on your phone that can be used to validate your purchase online or such.

SBI enables PoS based Cash Withdrawals

You can now get cash from a local store or petrol pump rather than go to an ATM, if you own an SBI card.  The Hindu reports:

In a first-of-its-kind initiative, SBI is allowing cash withdrawal of up to Rs 1,000 from any shop/trader with a point-of-sale (PoS) terminal.

“A fee of Rs 7.50 will be charged to the customer, a part of which goes to the trader. Actually, it is a win-win situation for all,” Sadanand, a senior SBI official looking after ATMs and alternative channels told Business Line.

While this sounds very good, it will probably be used only where there is no other ATM available – such as in rural or semi-urban settings. In cities, you can see ATMs within walking distance of most establishments, and in India, because of RBI rules, you can withdraw money from any bank’s ATM (four transactions free a month). For the crowd that needs Rs. 1000, the walk to the ATM will be quite worth the money.

  • Dhananjay Redkar says:

    Aadhar / Biometric validation at ATM’s – scary thought for multiple reasons –
    1) Has the validity of bio metric data capture by Aadhar being established to ensure that it will work in 90% or so cases
    2) The Bangalore ATM scenario – the culprit will drag the victim to the ATM bio metric reader for validation
    3) What will it do to the costs of the Banks?

    • Cost wise not quite as much as Aadhar is API enabled and fingerprint tech is very cheap. ATM robberies have happened a lot with ATM cards too with threat of killing person if he doesn’t give code, and that code is generally given – plus tech to catch burglars has to be different. The benefits outweigh the downsides, I think – for every robbery there will be 100s of those helped who get intimidated by tech.
      Validity wise we’ll have to wait and see I guess.

  • Gopal says:

    POS cash withdrawal is very common in the US and available at no fee – it helps retailers minimize cash they have to manage at the end of each day.

  • lohit says:

    Fingerprints/biometrics are a bad idea as a replacement for passwords. Once stolen they cannot be changed, unlike passwords.
    As a secondary authentication mechanism maybe yes, but as a primary one probably not a good idea.

  • Px says:

    second lohit
    Imagine a line at a big bazaar or reliance on sunday …with major lines and badly trained staff and even stupider customers !
    Good idea to put a financial bar say of Rs 5000 above which biometrics could be used !

  • Santhanam says:

    // you can withdraw money from any bank’s ATM (four transactions free a month). //
    I remember it is 5 transactions free per month.
    Could you please clarify ?

  • Vinay Rao says:

    Still don’t see how this is going to bring banking to the unbanked. Can someone with simply a mobile device (and a submitted proof of address) open a branchless bank account, because the village in which is stays in has no branches (but has mobile networks)?
    Even if this means bringing an authentication layer into the device to enable transactions – such as a Java/ Android App with secure PIN pad, or fingerprint scanning, and/or an added layer of bank authentication via a Bank SIM card (or SAM as they are often called) – a slew of low cost devices that enable real banking AND interperson transaction is needed. This will kill the need for expensive, unreliable, ATMs and the safety issues that come with it.
    As for POS based cash withdrawals, I’d helped Tata Indicom build a device and construct a service around it, for doing just this, in 2005.
    http://www.tata.com/company/Media/inside.aspx?artid=VXR8QuBazko=
    By the time they crossed regulatory hurdles in 2007 (wireless payments anyone?), all those involved lost steam.
    Enabling actual money transfer (And not talk time currency), even for small purchases, with instant acknowledgement, is the future for any large country.

  • Compulsory biometric validation for ATM withdrawal? This is quite frightening. I often give my ATM card to my wife when she needs to withdraw money. Now she may have to carry my finger too to the machine