On January 19, Wired News posted an article about the upcoming release of biometrically secured ATMs in rural India (see article at http://www.wired.com/news/technology/0,72284-0.html?tw=rss.index).
This isn't the first initiative that is trying to replace banking cards with a biometric, typically fingerprints. Pay by Touch has been making good progress in the US retail space. Their offering allows a user to register their credit card and bank information with the Pay by Touch network and secure it with a fingerprint. Then, instead of presenting a credit card to make payment, you just enter your record locator number (phone number or some other personal code), slap your thumb on the sensor and select which card you want to use for payment. The pitch is convenience (leave your wallet at home), not security.
Now, the ATM initiative in India balances user convenience, lower cost and fraud reduction. Though I agree that it could be easier (no cards to carry or PINs to forget) and lower cost (adding in biometrics to the ATMs is much cheaper than issuing hundreds of thousands of cards (paying for replacement cards, handling customer service for resetting PINs). However, making a major claim for fraud reduction?
ATM fraud is typically executed three ways. Either the user's card and PIN are stolen and used for fraud, the user's card is stolen and reprogrammed, or the user is assaulted at the machine and forced to withdraw money. Now, in a cardless ATM concept, someone stealing a card and PIN is negated. However, I would argue that this is the least costly form of fraud. The act of stealing and reprogramming ATM cards, usually in the pervue of organized crime will disappear, however organized crime will find other ways of committing fraud.
Now, the most common form of ATM fraud - where a user is assaulted at the ATM (or assaulted and brought to the ATM) and forced to make a withdrawl - exchanging an ATM card for a fingerprint doesn't make any difference.
I do wonder how successful these new devices will be in the long term. Having used a fingerprint biometric secured DVD rental kiosk in Germany, it regularly took three or more attempts before a fingerprint can be read. In addition, in very dry climates, fingerprints become less distinct (not that all of India is hot and dry) and harder to use. Now, not being able to rent a DVD in the case of a biometric failure is annoying. Not being able to have access to my money - that's another story.