Inclusion of biometrics in Micro Finance
Microfinance is helping people across the country allowing those who live in remote areas to get access to finance. Microfinance companies are taking transactions to small towns and using POS terminals and other technologies. With the use of technology, comes risk. Biometrics can help microfinance firms to ensure security and authenticate recipients of microfinance.
Biometrics in Microfinance
Microfinance companies need to identify and authenticate individuals prior to executing financial transactions with them. The best way of doing this is by using biometrics in the form of fingerprint, face scan, or iris scan. Biometrics is today being used in the finance sector by all companies, including those in the microfinance area.
It is important to accurately identify individuals before they are given financial assistance. Biometrics is the best way since it ensures accuracy and is reliable. Citizen identification system has been implemented in countries like India and this is being used for identifying people prior to executing transactions.
POS System for Biometrics
POS or Point of sale system allows biometric authentication to be done using terminals. These terminals can be taken even to remote locations and used for identification and authentication. It allows citizens in rural areas to get access to financial transactions without having to go to a bank. They can get the services delivered to their doorstep.
The POS system can be linked to the citizen identification. Eg: In India, the Aadhar system stores the biometric data of citizens and uses it to authenticate them. This system can be accessed by microfinance firms to carry out transactions. They can capture fingerprints using a scanner and send the data to the Aadhar system for authentication. It would help them confirm the identity of individuals and thus carry out authentication.
The benefits of using such a POS system are:
- They allow a secure way of identifying individuals and authenticating them. This is to essential since identity has to be established before a person can receive microfinance loans or other benefits.
- Using POS system for authentication is convenient. The system can be taken to any location enhancing convenience.
- It allows the microfinance sector to spread its operations to the most remote location ensuring people across the country get access to microfinance.
- Biometrics is accurate, secure, and reliable. While there is a likelihood of fraud and errors in other types of identification, it is unlikely in biometrics. It thus helps prevent fraud.
- Ease of transaction is a key benefit that makes biometrics very useful.
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