System harnesses cell phone SMS to authenticate fund transfers, eliminate fraud
The mobile phone might be the Secret Weapon or agni asthra that could make debit and credit card-based transactions fraud-proof . And with a little software tweaking at the ATM, the same technology will allow people to draw money securely, from any ATM, anywhere, even without a card.
This is the exciting prospect, held out by a Bangalore-based start-up with its patent-pending technology that a few India-based banks are already said to be examining.
In a special demo for IndiaTechOnline, Shourabh Shrivastav, founder-Chief Executive Officer of 3P Technologies ( India), ( www.3ptec.com ) showed how a simple text message from one's mobile phone can provide an added layer of security when one uses a credit or debit card to pay, either online, or at point of sale (POS) terminals.
The system requires the user to register with a "BankOn" service provider, who stores the SIM and IMEI number of each mobile phone, together with last four digits of the credit/debit card. When the user offers his or her card for swiping or enters the details online for an Internet transaction, the fund will be transferred only after checking with the BankOn service. This generates an SMS message to the specific mobile phone registered by the user, with a query to confirm if indeed the real owner of the card is doing the transaction and if the amount sought to be transferred is same as the one authorised by the user. Only upon receiving an SMS confirmation will BankOn, clear the payment through the card's own gateway.
"This extra level of checking" will add just some 10 or 15 seconds to transactions that typically take 30 to 40 seconds to go through" says Shrivastav, "but in the process, it will completely eliminate the most common type of credit card frauds like spoofing, skimming etc".
The other scenario that BankOn is promoting, involves payment from ATMs -- to persons who might not have any ATM card of their own. This will require a small software change at the ATM , but the benefit will be enormous, Shrivastav suggests. This is how it will work:
The ATM displays need to be modified to allow for a non-card mode of operation. If I want to send you ( living in another city -- or for that matter,country) a thousand rupees or its equivalent, I use the BankOn service to send you ( on your mobile phone via SMS), a unique four digit code, as well as telling you how much money I am sending. You enter this code at the ATM, and the amount you want to draw ( it must exactly match the amount I am sending you). Through BankOn, I have also indicated the mobile number of my beneficiary and the STD/ISD code of his/her country/city. The transaction goes through only when ATM used matches the city, the amount sought to be drawn is exactly same as the one authorised and the unique code sent only to the recipient's phone tallies. "It's fool proof -- and it throws open the ATM network to millions who don't even have a bank account", claim 3P Technologies' engineers.
There is another angle, they suggest: banks will have a strong incentive to make such card less ATM withdrawals easy: they will share revenue with the BankOn service provider for each transaction, though the customer might get it for free. Shrivastav says he is already working on a voice mode of his solution, that will allow visually challenged bank customers to safely draw money from ATMs, the cardless way. Modifying a standard ATM to meet the Reserve Bank's new stipulation that every third new ATM should be disabled friendly, typically costs around Rs 50,000. The 3P solution suggests this can be achieved more cost effectively, even while growing the ATM;s usage beyond bank customers.
3P's Chairman is former State Bank of India Chief General Manager B.B. Saxena .
The Bank On system works with all Java and Symbian phones but the inventors are working to extend it to all major cellular platforms, including iPhone and Blackberry. It is independent of the phone handset as well as telco service provider. (Bangalore Aug 24 2009)