May 2020

Indian companies cannot use Aadhaar data. Who can dominate the Indian identity authentication market?

Imagine that you are driving steadily on a hilly road. Suddenly a landslide is blocking the road ahead. You have to slam the brakes. The journey is suddenly interrupted. I don't know how to reach your destination. After the Supreme Court of India announced the Aadhaar judgment, the Indian fintech industry is in such a state.


The Supreme Court of India announced on September 26 that it banned private companies from accessing biometric databases. Because Aadhaar only earns a nominal fee and can remotely access rural markets and urban poor areas, the ban has caused a heavy blow to the banking industry and the wider financial services industry.


UIDAI and Adhaar

Indian Unique Identification Authority (UIDAI) Proposal

Since then, technology companies have been looking for viable alternatives. The Indian Unique Identification Authority (UIDAI) has proposed a new method that can manage Aadhaar and manage offline citizen registration.

According to the process, any entity accessing the Aadhaar number online must download a new QR code or XML format from the UIDAI website. This method can protect the security of citizen biometric data and protect the privacy of the 12-digit unique identification number.


However, the fintech industry is not interested in this option.


IDfy is a Mumbai technology startup that provides identity verification services. Its CEO Ashok Hariharan said, "The Aadhaar XML process includes many steps, including obtaining a one-time password (OTP), selecting a series of permissions, and downloading XML files. Used as an ID. The whole process is very complicated. If there are other options, most users will choose to use other IDs instead of Aadhaar. "


Mobile Numbers mismatch Aadhaar database

According to industry insiders, another problem is that the Internet bandwidth in remote locations is limited, and page jumps may occur during online process jumps. In addition, in many cases, the mobile phone number does not match the number in the Aadhaar database.


"Downloading XML files and new QR codes will be the last mile challenge because users need to complete OTP-based authentication before they can download files. If customers use different mobile phone services, identity authentication may fail." Fino Payments Bank products Head of Ashish Ahuja said.


Customer absorption

The biggest challenge facing fintech entities is to attract customers remotely. With Aadhaar, consumers don’t have to fill out a lot of paperwork, and they can access services through smartphones or computers even if they are far away.


"The biggest problem for us is that the client suddenly disappeared during the registration process, and Aadhaar solved this problem to a large extent," said a senior director of an anonymous fintech company in Bangalore that provides investment solutions. "Consumer The person can fill out the form in a few seconds, get the digital signature of the file through Aadhaar, and complete the identity verification through biometric technology. This process only accounts for a small part of the actual cost. "


Companies benefiting from this include digital loan companies such as Capital Float, Lendingkart, Early Salary, and investment startups such as Zerodha who want to be close to consumers digitally.


"If you have to manually collect the documents, the cost will increase greatly. In addition, it is very likely that the document is filled in incorrectly," said Nithin Kamath, CEO of Zerodha. "If a signature is missing, the agent must go a long way. Let the parties make up. "


Whether it is Kotak’s 811 plan or the National Bank of India’s concept of attracting a new generation of customers through YONO, it shows that banks also provide services to customers through digital means.


Deepak Sharma, Chief Digital Officer of Kotak Mahindra Bank, said, "We are working hard to digitize the process and further realize paperlessness at the branch. Now that only direct benefit transfer (DBT) customers can use Aadhaar data, we must create a seamless customer experience from scratch . "


In addition to fintech companies and traditional banks, the pressure on payment banks is not small. The state commissioned these entities to popularize digital payments to the masses.

For example, Fino Payments Bank relies on Aadhaar as the main body to provide services to migrant workers or customers from the rural poor. And now customers will absorb fees five times more than before, especially for manual collection of documents.


"The seamlessness of Aadhaar has greatly accelerated the account opening process. In addition, for our customer base, Aadhaar is easy to obtain. They have no way to provide other supporting documents." Ahuja from Fino Payments Bank said.


Recurring payment issues

Affected by mobile wallets and the unified payment interface (UPI), digital payments are becoming more and more common, but the regular payment process still requires manual intervention, including the payment of equivalent monthly installments (EMI) and system investment plans (SIP) for mutual funds.

The National Payment Corporation of India (NPCI) solves this problem through an electronic authorization system based on the National Automatic Clearing House (NACH) platform.


Consumers do not need to fill out a large number of documents, they can automatically debit their accounts using biometric databases by issuing electronic authorizations. NPCI said that due to court orders, it had to stop all eNACH authorizations last month and required all banks to move to online banking and debit card authorization.


PayU India operates the "Buy Now, Pay Later" product called LazyPay, and its general manager Jitendra Gupta stated that "eNach is the main mode of deduction from the customer's LazyPay loan account. It has now been terminated and the operation side is completely beaten Chaos. "


Gupta said that banks must manually verify customer signatures, greatly affecting turnaround time and cost efficiency. "The entire process takes 10-15 days, compared to only two seconds before. In addition, the cost of collecting NACH has increased dramatically, which seriously affects the user experience."


A senior banker said that if a customer initiates a process online, then assume that he or she can use online banking or debit cards as payment tools. The bank can solve this problem by enabling other modes of eNACH. "However, now that a lot of paperwork is required, the process becomes very troublesome."


Business uncertainty

These problems have adversely affected the business environment and damaged the confidence of entrepreneurs to carry out innovative business. Many businesses are built on Aadhaar. These businesses help poor people enjoy financial inclusion through Jan Dhan accounts, mobile phones and unique identification numbers. The Supreme Court's decision suddenly changed all this.


PayNearby claims to support more than 28% of Aadhaar bank payments, and its general manager Anand Kumar Bajaj said, "Enterprises have invested a lot of money to install dongle in retail stores to identify customer biometric technology data. And now all this is useless. "


The Reserve Bank of India requires payment companies to complete the complete "KYC" process. When the purse company issued a call for the high cost of KYC, the country told them to invest in the eKYC model to save costs.


An anonymous senior manager of a payment company said, "Now we do not have eKYC, and a few months later is the deadline for the conversion of a half-KYC wallet to a full KYC wallet. We don't know when the alternative method will take effect."


February 28 was the deadline for the conversion of the complete KYC wallet, otherwise it will be invalid

Many early-stage startups have also flourished through customer certification. Entities such as DigiO, Idfy and Khosla Labs have established themselves as intermediaries such as financial service providers Zerodha and PayU India.


"After Aadhaar's service was interrupted, revenue fell by more than 30%. We had to find alternative mechanisms to keep the business model running," said Ashf Hariharan of IDfy. "We also have a sub-authentication user agent (AUA) license, which is now invalid. . It is also a loss for us. "


However, Hariharan said that the business cannot be stagnant. As a technology company, IDfy uses video and machine learning capabilities to innovate and explore other ways to complete customer verification.


What should we do now?

Sharma from Kotak Mahindra Bank said, "We are looking for a reliable alternative mechanism, offline Aadhaar seems to be the second best solution. We are working with NPCI to develop other methods, such as through online banking or debit card authorization Complete the authorization as an alternative to eNACH. "


Kamath from Zerodha also said that the company has switched to video KYC and DigiLocker, and plans to switch to XML-based KYC and video to attract customers. He said that there may be a higher customer decline rate, but the company must bear it.


Another major problem facing the company is front-end employee training. In the past few years, with the digitization of processes, intermediaries and employees have learned to switch to tablets and smartphones to use eKYC, and now they must return to other forms such as paper or XML and video.


Fino Payments Bank relies on bank intermediaries to establish contact with people in remote rural areas. The bank ’s Ahuja said, "It took a lot of time to train employees to use eKYC. Now we must re-train in other modes, and the literacy rate of the last mile is always Is a challenge. "


Another trend for many startups is to move from online products to omnichannel products. Vivek Belgavi, financial technology leader of PricewaterhouseCoopers India, said, "Businesses are resuming acquisitions."


Banks can go back and change the direction of development, because they are mainly for the purpose of experimenting with technological products, but for early entities that may not be able to obtain investor support in many cases, the situation may be more difficult.


Large, well-funded technology companies such as Google, WhatsApp and Chinese companies have begun to enter the Indian fintech field, making the local technology startups difficult. In addition to competition from global players, the regulatory environment is constantly changing, and local companies have to fight on both fronts simultaneously.


As the founder of a digital loan startup said, you can sit back and regret the things you lost, or you can pick up stones, clear the road and move forward. The situation can't stop you from being annoyed, so Indian companies are actively looking for alternative business models.


JAM (Jan Dhan-Aadhaar-Mobile)

PricewaterhouseCoopers Belgavi said, "JAM (Jan Dhan-Aadhaar-Mobile) is only the first intervention, and the financial technology field needs more such intervention. All forces must be mobilized, whether it is policy, innovation or technology, to solve The issue of financial inclusion. "

India builds the world's largest biometric data system

    According to the Times of India, the Unique Identification Project (also known as the Aadhar Project) launched by the Unique Identification Authority of India (UIDAI) has completed the collection of biometric data for 820 million people. The project has become the world's largest biometric data project, covering 67% of India's population.

The data shows that the FBI's biometric database is 150 million fewer than India. In the future, more people in India will join the project, making it the number one database in the world for similar projects. As of April 20, India’s Uttar Pradesh had the largest number of participants, reaching 105 million, Maharashtra ’s 91.9 million, and West Mon State’s 61.2 million.

    Indian Oil Minister Dharmendra Pradhan said that the data is scientific and very practical, and the government plans to use it to guide the oil sector to formulate cooking gas subsidies (Cooking Gas Subsidies).

At the same time, the Indian government is collecting bank account numbers, biometric data and mobile phone numbers, and by combining these three aspects of information, more targeted subsidies are available.

Currently, more than 500 million people in India do not have official identification (ID), which has caused a series of problems:

  • Unable to obtain government assistance
  • Open bank accounts
  • Apply for loans
  • Obtain driver's licenses, etc.

The Indian government has specially arranged a subsidy of US $ 250 billion for its poor people, of which more than 40% have been embezzled by the people involved.

The Aadhar ID card has 12 digits, and the government can link bank accounts with specific people (especially the poor), and directly transfer related subsidies to their bank accounts. The data shows that ID cards are being issued at a rate of 20 million per month.

The Aadhar project will eliminate the middle link in the process of subsidizing the poor, and direct transfer can also curb corruption.

As of December 2014, the government has linked 100 million identification cards to bank accounts, and it is expected that the number of bank accounts will increase further in the future, and will bring more convenience to provide financial transfer payments to the poor.

In the future, binding biometric cards to mobile phone numbers will make the distribution of welfare subsidies more targeted.

    At the same time, some Indian think tank scholars and activists (such as the Centre for Internet & Society in Bangalore) expressed concerns about the privacy issues of the Aadhar project and even questioned the effectiveness of the entire project.

Former Intel engineer Srikanth Nadhamuni (Srikanth Nadhamuni) helped the Indian side develop the Aadhar technology platform in September 2010, and he is currently the head of Khosla Lab in Bangalore.

Nadhamni said that these data packets have been processed through 2048-bit encrypted storage. Once someone tries to access the data without authorization, they can all destroy themselves.

Radio Frequency Identification, RFID Related Theory

 RFID (Radio Frequency Identification) technology, that is, radio frequency identification technology, is a non-contact automatic identification technology that began to emerge in the 1990s. Radio frequency identification technology is a method that uses radio frequency signals to achieve spatial coupling (alternating magnetic field or electromagnetic field)

Overview of RFID Technology

 The technology of contactless information transmission and the purpose of identification through the transmitted information. Compared with automatic identification technologies such as bar codes, magnetic stripes, magnetic cards, fingerprints, optical characters, etc., RFID has wireless read / write, strong signal penetration ability, long recognition distance, long service life, good environmental adaptability, and multiple tags at the same time Identification, large information storage capacity and data can be rewritten and other advantages.


From the basic principle of information transmission, RFID technology is based on the transformer coupling model (energy transfer and signal transmission between primary and secondary) in the low frequency band, and the space coupling model based on the radar detection target in the high frequency band (radar emits electromagnetic waves.

After encountering the target, carry the target information back to the radar receiver). In 1948, Harry Stockman's "Communications that Utilize Reflected Power" laid the theoretical foundation for radio frequency identification technology.

Composition and working principle of RFID system

System composition

The general radio frequency identification system is generally composed of three parts: a radio frequency card (transponder), a reader / writer (reader), and an application system (including connection lines.

Radio frequency card: An antenna that carries information about the target item and transmits radio frequency signals between the reader and the electronic tag;


RF transceiver: generates RF signals

Reader: Receive the radio frequency signal returned from the electronic tag, and transmit the decoded data to the host system. In actual design, readers, antennas and transceivers are generally integrated together and are collectively called readers. Therefore, it can also be said that the RFID system is composed of a tag and a reader.

Working principle

The working principle of the RFID system is that in the coupling channel, the reader and the tag realize the spatial coupling of the RF signal through the coupling element, and according to the timing relationship, the data exchange and energy transfer are completed. The basic model of its work is shown in Figure 2- 2 shows,

RFID field

The reader provides working energy to the electronic tag. For passive tags, when the tag leaves the RFID field, the tag is dormant due to no energy activation. When the tag enters the RFID field, the radio frequency wave emitted by the reader activates the tag circuit.

The tag rectifies the radio frequency. The wave is converted into electrical energy and stored in the capacitor in the tag, thereby providing energy for the tag's work and completing the data exchange.

For semi-active tags, the RF field only plays an active role. Active tags are always in an active state, in an active working state, and interact with the radio frequency waves emitted by the reader, and have a long reading distance.


Timing refers to the working order of readers and tags. That is, the reader actively wakes up the tag, and then the tag first reports to the door. For passive tags, it is generally the reader-first format. For simultaneous reading of multiple tags, the reader-first format or the label-first format can be used.

Data communication between the reader

The data communication between the reader and the tag includes the data communication from the reader to the tag and the data communication from the tag to the reader. The data communication from the reader to the tag includes offline data writing and online data writing.

For the data communication process from the tag to the reader, its working methods include the following two tags:

When the tag receives the radio frequency energy of the reader, it is activated and transmits the data information stored in the tag to the reader.

After the tag is activated, it transfers according to the instructions of the reader. Enter the data transmission state or sleep state. In these two working methods, the former belongs to one-way communication, and the latter belongs to half-duplex two-way communication.

In the working process of the radio frequency identification system, energy is always used as the basis to exchange data through a certain timing method. Therefore, there are three event models based on energy supply in the working space channel, an event model for realizing data exchange in a time series manner, and an event model for the purpose of data exchange.

Classification of RFID systems

According to the different functions completed by the RFID system, the RFID system can be roughly divided into four types: EAS system, portable data acquisition system, network system, positioning system.


 EAS technology

ELECTRONIC ARTICLE SURVEILLANCE (EAS) is an RFID technology installed at the doorway that needs to control the entry and exit of items. Typical applications of this technology are stores, libraries, data centers, and other places.

When unauthorized persons illegally remove items from these places, the EAS system will issue a warning. When applying the EAS technology, first attach an EAS label to the item. When the item is normally purchased or legally removed, the EAS tag is deactivated by a certain device at the checkout point, and the item can be removed.

When an item passes through the door equipped with the EAS system, the EAS device can automatically detect the activity of the tag, and the EAS system will issue a warning if the active tag is found. The application of EAS technology can effectively prevent the theft of items, whether it is a large item or a small item.

Radio Frequency Identification

Using EAS technology, items no longer need to be locked in glass cabinets, allowing customers to view and inspect products freely.

This is of great practical significance in the increasingly popular choice today. A typical EAS system generally consists of three parts: 1) an electronic tag attached to a commodity, an electronic sensor.

2) an electronic tag inactivation device so that authorized goods can enter and exit normally

3) a monitor, which causes a certain area of ​​surveillance at the exit space.


The working principle of the EAS system is: in the surveillance area, the transmitter transmits signals to the receiver at a certain frequency. The transmitter and receiver are generally installed at the entrance and exit of retail stores and libraries to form a certain monitoring space.

When a tag with special characteristics enters the area, it will interfere with the signal sent by the transmitter. This interference signal will also be received by the receiver. After the analysis and judgment of the microprocessor, the alarm will be controlled.

EAS can be divided into many types according to the different signals emitted by the transmitter and the different principles of the tag interference to the signal. The latest research direction of EAS technology is the production of labels. People are discussing whether EAS labels can be added to the product during the production or packaging process as a barcode, and become a part of the product.


 Portable data acquisition system

The portable data collection system uses a handheld data collector with an RFID reader to collect the data on the RFID tag. This kind of system has greater flexibility and is suitable for application environments where fixed RFID systems are not suitable.

The handheld reader (data input terminal) can transmit data to the host computer system in real time through radio wave data transmission (RFDC) while reading the data, or it can temporarily store the data in the reader. Transfer data to the host computer system in batches.


 Logistics control system

In the logistics control system, fixedly arranged RFID readers are distributed in a given area, and the readers are directly connected to the data management information system, and the signal transmitter is mobile, generally installed on moving objects and people.

When objects and people flow through the reader, the reader will automatically scan the information on the label and input the data information into the data management information system for storage, analysis, and processing to achieve the purpose of controlling logistics.


 GPS (Geographical Positioning System)

The positioning system is used for positioning in an automated processing system and for operating positioning support for vehicles, ships, etc.

The reader is placed on a moving vehicle, ship, or moving material, semi-finished product, or finished product in an automated assembly line. The signal transmitter is embedded below the surface of the operating environment.

Position identification information is stored on the signal transmitter, and the reader is generally connected to the main information management system in a wireless manner or a wired manner.

RFID standards and technical specifications

The RFID standard system is divided into technical standards and application standards. Technical standards mainly include interface specifications, physical characteristics, reader protocol, coding system, test specifications, application specifications, data management, information security and other standards.

The application standards are mainly divided into animal identification, identification, business, transportation, military and so on.


At present, the commonly used international standards mainly include the ISO / IEC18000 standard (including 7 parts, involving 125KHz, 12.56MHz, 860-960MHz, 2.45GHz and other frequency bands), ISO11784 and ISO1178 for animal identification, and ISO10536 for contactless smart cards , 15693, 14443, ISO10374 for container identification, etc.

At present, there are three well-known organizations that formulate RFID standards internationally: ISO International Organization, EPC global led by the United States, and Ubiquitous ID Center in Japan.

These three organizations have their own goals and development plans for RFID technology application specifications. The following briefly introduces the relevant EPC global international standards.


Electronic Product Code Frequency

The frequency used by the EPC (Electronic Product Code) standard is 13.56MHz and 902-928MHz, which is promoted and proposed by EPC global Inc. The goal of EPC is mainly to promote that each item in life has a unique code, and are connected to form a so-called Internet of Things concept.

Internet of Things EPC

Users can use the Internet of Things EPC code name resolution service ONS (Object Name Service), so that goods using EPC RFID tags can be circulated around the world. In June 2004, EPC global officially announced the world ’s first RFID standard, allowing different companies around the world to have a common standard in using RFID. The five different levels set by EPC Tag are:


1) Class0: Only for reading, simple and passive, only providing read-only labels with the number specified at the factory. The label is written with a set of unchangeable numbers at the factory to provide simple service identification;


2) Class1: write only once, simple passive, available for write once;


3) Class2: Repeated reading and writing, with repeatable reading and writing functions, passive tags;


4) Class3: Semi-passive tag with built-in sensor, repeated reading and writing function, and additional sensor, which can detect temperature! Humidity! Dynamic change etc. and recorded in the tag, built-in battery to increase reading distance;


5) Class4: belongs to the antenna, it is a semi-passive tag, which can actively communicate with other tags, and is still in the process of research and development.

2.5. Current status of RFID development at home and abroad


The prototype of RFID technology can actually be traced back to World War II, when the British army used wireless identification technology to identify the aircraft of both the enemy and us.

Despite its 60-year history, the lack of industry standards has made the commercialization of radio frequency identification technology so long. With the development of science and technology, the civilian use of RFID technology has gradually emerged in the 1990s.


Since the 1990s, many regions and companies have begun to pay attention to the interoperability between these systems, namely the standardization of operating frequency and communication protocols. Only standardization can make RFID's automatic identification technology more widely used.

At the same time, RFID smart cards and smart keys have become popular as means of access control and physical security, trying to replace traditional access control mechanisms.

This kind of smart card called contactless IC has strong data storage and processing capabilities, can be personalized for the holder, and can more flexibly implement the access control strategy.


In the late 1990s, ultra high frequency (UHF) passive RFID tag technology began to appear, providing longer transmission distances and faster transmission speeds.

From this point on, RFID technology is really a real application, such as pallet and packaging tracking in supply chain management, inventory and warehouse management, container management, logistics management, etc. And gradually try to become the data and semantic basis of synthetic enterprise applications (including ERP, SCM, CRM, EAM, B2B, etc.).


From the late 1990s to the present, RFID technology has developed rapidly at home and abroad. TI, Motorola, NXP (formerly Philips Semiconductor Division), Microchip and other world-renowned semiconductor manufacturers have invested in the production of RFID products.

Retail giants such as Wal-Mart, Target, Metro Group and some government agencies, such as the US Department of Defense, have begun to promote RFID applications, and require their suppliers to adopt this technology. At the same time, there have been multiple global RFID standards and technology alliances in standardization disputes, mainly EPCglobal, AIM Global, ISO / IEC, UID, IP-X, etc.

These organizations are trying to achieve a globally unified platform in terms of tag technology, frequency, data standards, transmission and interface protocols, network operation and management, and industry applications.

RFID technology will bring tens of billions of dollars to the global market, followed by huge demand for servers, data storage systems, management software, and computer facilities. As the cost of tags decreases and technology advances, RFID technology will soon gain popularity worldwide.

The popularity of RFID identification technology will inevitably lead to revolutionary changes in various industries such as logistics, retail, manufacturing, transportation, and medical treatment.

As a global electronics manufacturing plant and the third largest trading country, RFID will bring opportunities and new economic growth points for China's development.


In the next 10 years, countless radio frequency tags will fill our lives. All kinds of identification cards / cards, bank cards, air tickets, and various retail products in shopping malls will be affixed with these small RF tags.

Through the radio frequency tag, the RFID device communicates wirelessly and obtains the data of the target object to achieve the purpose of automatic identification.

Typical application of RFID

  • Logistics and supply management
  • Manufacturing and assembly
  • Air baggage handling / Express Parcel Processing
  • Document tracking / library management
  • Animal identity
  • Sports timing
  • Access control / electronic tickets
  • Road automatic toll collection

Summary of this chapter

This chapter mainly introduces the concepts related to RFID and other theoretical knowledge related to RFID. First of all, RFID, as a non-contact automatic identification technology, has many outstanding advantages over the currently widely used barcode technology. Therefore, RFID technology has received widespread attention at home and abroad, and its application prospects are very broad.

Secondly, the composition and working principle of the RFID system and related international standards are introduced, which provides a theoretical basis for the realization of the RFID warehouse management system.

Next, the development status of RFID at home and abroad and the classification of RFID system are introduced. It is pointed out that RFID technology is widely respected by people. After nearly 80 years of exploration and research, many good results have been achieved.

According to the different functions of the RFID system, it can be divided into different types and can be applied to different applications. However, due to its own complexity, there are many technical difficulties that have not been well resolved and the cost is too high. At present, this technology is still not widely used in industrial production and life.

The technical difficulties in RFID software are mainly concentrated in RFID data cleaning algorithms, complex event processing algorithms, data mining, etc. This article is to implement a local complex event processing algorithm to solve the problem of out-of-order data flow.


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