Background of the invention
A unique identification project has been proposed by the planning commission of
India. As part of this project, a unique identifier will be assigned to each resident
which is linked to the person's demographic and biometric information. The
5 unique identifier (UID) will make it possible for residents to easily verify their
identity to both public and private agencies. The UID will guarantee identity and
not rights, benefits or entitlements.
One important aspect of the model is that Know Your Customer (KYC) and/or
10 Know Your Resident (KYR) policies and regulations are adhered to. These
policies are due diligence activities that financial institutions and other regulated
companies must perform to ascertain relevant information from their clients for
the purpose of doing business with them. These policies are becoming
increasingly important globally to prevent identity theft, financial fraud, money
15 laundering and terrorist financing.
Brief Description of the Drawings
An example of the present invention will now be described in detail, by way of
example only, with reference to the accompanying drawings, in which:
20 Figure 1 shows schematically a known authentication operating model;
Figure 2 shows schematically an operating model of a welfare disbursement
payment system;
Figure 3 shows schematically an operating model of a cash withdrawal system;
and,
25 Figure 4 shows a workflow diagram of a process chain which uses a UIDsupported
payment system.
Detailed Description
At the centre of the UID project is a form of online authentication, where
30 agencies can compare demographic and biometric information of a resident with
a record stored in a central database. This authentication system can be
accessed by banks and other service providers to verify an individual's details
anytime and from anywhere. An exemplary authentication platform and example
-2-
e uses of the platform are described in February 2012 in the paper "Aadhaar
Enabled Service Delivery" by the Unique Identification Authority of India (UIDAI),
Planning Commission, which is incorporated by reference.
5 Figure 1 depicts the authentication operating model exemplified in the above
paper. The model includes Authentication User Agencies (AUA) 111 and
Authentication Service Agencies (ASA) 112. An AUA 111 is an entity that
utilises the authentication to enable one or more of their services and may
communicate with an ASA 112, which is an agency that has established secure
10 leased line connectivity to the Centrallnfonnation Data Repository (CIDR) 113 to
transmit authentication requests on behalf of the AUA 111 and receive
responses from the CIDR 113. The ASA 112 and the AUA 111 may of course
be the same entity and may each directly communicate with the CIDR 113 or the
direct service provider.
15
In the exemplary operating model of Figure 1, a resident 114 will request
authentication (step 101) with an authentication device/operator 115. The
authentication device 115 will then communicate with the AUA 111 using a
specific communication protocol (step 102). The AUA 111 will request that the
20 ASA 112 confinn the authentication (step 103). In this model, the ASA 112
passes the user infonnation onto the CIDR 113 which will return a yes or no
response depending on whether the authentication can be granted, i.e. that the
demographic or biometric infonnation presented by the user 114 matches the
infonnation stored for that user in the CIDR 113 (step 104). The ASA 112 then
25 passes this yes or no response to the AUA 111 (step 105). The AUA 111 will
then send the necessary updates and confinnation to the authentication device
115 (step 106) depending on the individual service. The service is then
delivered to the user, most likely by the authentication device 115, but
alternatively by a further electronic system (step 107).
30
In order to allow service providers to communicate with the data repository CIDR
113 there has been defined a set of Application Programming Interfaces (APls)
which are outlined in the April 2012 paper 'Aadhaar Authentication API
-3-
Specification - Version 1.6' by the Unique Identification Authority of India
(UIDAI), Planning Commission, which is incorporated by reference. The APls
defined in the paper use XML and the authentication service is a stateless
service over HTTPS.
5
In addition to setting out APls which define how services should interact with the
CIDR, the paper also sets out an exemplary authentication flow in the case of an
operator assisted transaction at a Point of Service (PoS) terminal as follows:
10 "a) Resident provides [UID] Number, necessary demographic and
biometric details to terminal devices belonging to the AUAlSA (or
merchant/operator appointed by AUAlSA) to obtain a service offered
by the AUAlSA.
b) [UID] authentication enabled application software that is installed on
15 the device packages these input parameters, encrypts, and sends it to
AUA server over either a mobile/broadband network using AUA
specific protocol.
c) AUA server, after validation adds necessary headers (AUA specific
wrapper XML with license key, transaction id, etc.), and passes the
20 request through ASA server to UIDAI CIDR.
d) [UID] authentication server returns a "yes/no" based on the match of
the input parameters.
e) Based on the response from the [UID] authentication server,
AUAlSA conducts the transaction."
25
Although the extract above describes that the resident provides the necessary
demographic and biometric details, in practice the resident need not provide
their biometric details, in many instances merely using the UID number is
sufficient to identify the resident.
30
A number of the aims and potential advantages of the UID project include (see
http://uidaLgov.in/aadhaar.html, accessed 29 November 2012):
-4-
A guarantee of uniqueness and centralised, online identity verification
which would be the basis for building multiple services and applications, and
facilitating greater connectivity to markets.
The ability to access services and resources, anytime, anywhere in the
5 country.
The provision of an identity infrastructure for ensuring financial inclusion
across the country - banks can link the unique number to a bank account for
every resident, and use the online identity authentication to allow residents to
access the account from anywhere in the country.
10 A foundation for the effective enforcement of individual rights. A clear
registration and recognition of the individual's identity with the state is necessary
to implement their rights - to employment, education, food, etc. The number, by
ensuring such registration and recognition of individuals, would help the state
deliver these rights.
15
One of the potential applications of the project that has been proposed is a
universal, micropayment solution. Such a solution is described in April 2010 in
the paper 'From Exclusion to Inclusion with Micropayments' by the Unique
Identification Authority of India (UIDAI), Planning Commission, which is
20 incorporated by reference.
In particular, this paper sets out the following:
"In the last twenty years, India has undergone a transformation of its
25 economic and regulatory structures. Policy reforms in this period have
led to the increasing maturity of our markets, as well as healthy
regulation. The emphasis on de-licensing, entrepreneurship, the use
of technology and decentralisation of governance to the state and local
level have in particular, shifted India from a restrictive, limited access
30 society to a more empowered, open access economy, where people
are able to access resources and services more easily and effectively.
-5-
5
. But despite these efforts, access to finance has remained scarce in
rural India, and for the poorest residents in the country. Today, the
proportion of rural residents who lack access to bank accounts
remains at 40%, and this rises to over three-fifths of the population in
the east and north-east parts of India.
This exclusion is debilitating. Economic opportunity is after all,
intertwined with financial access. Such financial access is especially
valuable for the poor-it offers a cushion to a group whose incomes
10 are often volatile and small. It gives them opportunities to build
savings, insure themselves against income shocks and make
investments. Such savings and insurance protect the poor against
potentially ruinous events-illness, loss of employment, droughts, and
crop failures. However due to the lack of access to financial services,
15 many of the Indian poor face difficulties in accumulating savings.
To mitigate the lack of financial access in India, the regulator has
focused on improving the reach of financial services in new and
innovative ways - through no-frills accounts, the liberalization of
20 banking and ATM policies, and branchless banking with business
correspondents (BCs), which enables local intermediaries such as selfhelp
groups and kirana stores to provide banking services. Related
efforts have also included the promotion of core-banking solutions in
Regional Rural Banks; and the incorporation of the National Payment
25 Corporation of India (NPCI) to provide a national infrastructure for
payments and settlements in the country.
Advancements in technology such as core banking, ATMs, and mobile
connectivity have also had enormous impact on banking. Mobile
30 phones in particular present an enormous opportunity in spreading
financial services across India. These technologies have reduced the
need for banks to be physically close to their customers, and banks
have been consequently able to experiment with providing services
-6-
through internet as well as mobile banking. These options, in addition
to ATMs, have made banking accessible and affordable for many
urban non-poor residents across the country.
5 With the poor, however, banks face a fundamental challenge that limits
the success of technology and banking innovations. The lack of clear
identity documentation for the poor creates difficulties in establishing
their identity to banks. This has also limited the extent to which online
and mobile banking can be leveraged to reach these communities.
10
Besides challenges of access and identity, a third limitation has been
the cost of providing banking services to the poor who transact in
smaller amounts, commonly referred to as micropayments. Banks
consider such payments unattractive since transaction costs may be
15 too high to bear.
The Unique Identification number (UID), which identifies individuals
uniquely on the basis of their demographic information and biometrics
will give individuals the means to clearly establish their identity to
20 public and private agencies across the country. It will also create an
opportunity to address the existing limitations in financial inclusion.
The UID can help poor residents easily establish their identity to
banks. As a result, banks will be able to scale up their branch-less
banking deployments and reach out to a wider population at lower
25 cost.
An efficient, cost effective payment solution is a dire necessity for
promoting financial inclusion. The UID number and the accompanying
authentication mechanism coupled with rudimentary technology
30 application can provide the desired micropayment solution. This can
bring low-cost access to financial services to everyone, a short
distance from their homes.
-7-
The key features of UID-enabled micropayments outlined in this
document are as follows:
UID Know Your Resident (KYR) sufficient for Know Your Customer
5 (KYC): Banks in India are required to follow customer identification
procedures while opening new accounts, to reduce the risk of fraud
and money laundering. The strong authentication that the UID will
offer, combined with its KYR standards, can remove the need for such
individual KYC by banks for basic, no-frills accounts. It will thus vastly
10 reduce the documentation the poor are required to produce for a bank
account, and significantly bring down KYC costs for banks.
Ubiquitous Business Correspondent (BC) network and BC choice: The
UID's clear authentication and verification processes will allow banks
15 to network with village-based BCs such as self-help groups and kirana
stores. Customers will be able to withdraw money and make deposits
at the local BC. Multiple BCs at the local level will also give customers
a choice of BCs. This will make customers, particularly in villages, less
vulnerable to local power structures, and lower the risk of being
20 exploited by BCs.
A high-volume, low-cost revenue approach: The UID will mitigate the
high customer acquisition costs, high transaction costs and fixed IT
costs that we now face in bringing bank accounts to the poor.
25
Electronic transactions: The UID's authentication processes will allow
banks to verify poor residents both in person and remotely. Rural
residents will be able to transact electronically with each other as well
as with individuals and firms outside the village. This will reduce their
30 dependence on cash, and lower costs for transactions. Once a
general purpose UID-enabled micropayments system is in place, a
variety of other financial instruments such as micro-credit, micro-
-8-
insurance, micro-pensions, and micro-mutual funds can be
implemented on top of this payments system.
The UID-enabled micropayments solution is just one of the many
5 developmental applications of the UID number." .
As described above, the UID may provide a method of uniquely identifying a
person or a resident of a country, such that fraud may be reduced and trust and
inclusiveness may be increased. The UID platform allows for the provision of
10 further applications and services using the unique identifier.
In order to provide functionality such as that described above, there may be
established UID-enabled Bank Accounts (UEBAs). UEBAs are linked to aUlD
number and a customer can access their UEVA through a microATM device.
15 The UEBA generally operates as a prepaid account, similar to those used by
mobile operators when charging for talktime. The UEBA provides four main
features:
- a store of cash for savings, with a facility for making electronic deposits
and withdrawals in micro-amounts;
20 - a way to make payments;
- a channel for sending and receiving remittances; and,
- enabling balance queries and transaction history queries.
Other documentation which may aid in understanding the background to the
25 invention can be found at http://uidai.gov.in and http://uidai.gov.in/uidaidocuments.
html#publication, accessed on 29 November 2012.
For the purposes of introducing concepts of embodiments of the present
invention, an international payment system such as that operated by MasterCard
30 International Inc. and international remittance systems such as those described
in W02008/124584 and W02008/124580 may be used. These documents are
incorporated by reference.
-9-
The payment system operates to route and clear funds transfers from the
payment card accounts of senders to the payment card accounts of recipients.
One example of a payment system is the Banknet system, which is well-known
to those who are skilled in the art. The Banknet system is a global
5 telecommunications network linking all MasterCard card issuers, acquirers and
data processing centres into a single financial network. Typically, payment
systems such as Banknet comply with standards specifications which define the
interchange message specifications for the exchange of electronic transactions
made by cardholders using payment cards. ISO 8583 - Financial transaction
10 card originated messages is one such standard. The international remittance
systems described above may utilise these payment systems to initiate a funds
transfer.
The passage of goods from producer to market in rural communities involves the
15 passage of the goods through many hands down the chain and the reverse flow
of funds through many hands back up the chain. Naturally, every person in the
chain looks to make a profit on their transaction. However, if a person in the
chain looks to make an excessive profit this leaves reduced amounts of
remittance for those higher up in the chain. Ultimately, this leads to greatly
20 reduced remittance for the producer of the goods.
According to the present disclosure, a system is provided whereby a farmer, or
other merchant, who signs up for a service has access to the daily market prices
including a highest and lowest price of goods (single or various). These may, for
25 example, be provided via a short code SMS and may also be updated more
frequently (even in real time). This system can be used in all sectors of the
agricultural industry and also make use of a UID-supported payment system.
The payment system covers business to business, business to people and
people to people transactions ensuring that the whole passage of the goods
30 chain is covered. Transactions at every stage in the chain may take place via
mobile phone. Transactions at every stage in the chain may take place via a
prepaid payment card.
-10-
Part of the system may be a UID-supported application which the farmer
registers for and which can deliver the aforementioned services. This application
allows the producer to use a unique identifier (UID) to authenticate themselves
and to set up a linked mobile device-based banking account. Additional levels of
5 authentication such as biometric can also be incorporated into the schema.
Registering for the application may also provide the producer with the following
benefits:
10
Market updates
AD&D (Accidental Death & Disability) insurance
Weather forecast
Linked to application loyalty program
• Redeemable for air time
15
• Preferential rates and prices from preferred partner:
o Fertilizer suppliers
o Pesticide suppliers
o Fuel
o Seed
0 Packaging
20 0 Transportation
0 Distributors
0 Power
o Hiring of farm equipment
(Indirect impact: Assistance with disease control, increased yield, better quality)
25 Optional extras (Fees to be applied)
• Crop Insurance
• Income protection (Settlement of outstanding loans in the
case of death)
• Health Insurance
30
The farmer (or merchant) using the system may have his goods collected by an
intermediary. Here an agreement is struck to trade those goods at the market
price, less some commission for the intermediary, and this deal is verified via
-11-
e . either biometrics or UIO nUrT'ber, in a similar fashion to the authentication which
has already been discussed. When the goods are sold at market, either by the
farmer directly or the intermediary, a further verification is made of the
farmer/intermediary via biometrics or UIO number and the funds are transferred
5 automatically into the correct UIO associated and verified accounts, i.e. the
farmer and the intermediary, if applicable at the agreed commission rate.
Figure 4 depicts a workflow diagram of such a process chain which uses a UIOsupported
payment system in accordance with an embodiment. The diagram
10 demonstrates how a producer (the producer could be a farmer or any person
wishing to sell goods) is able to utilise the system to get their goods to market,
decide how they would like to receive payment for the goods and pay their
labourers and/or suppliers.
15 In the exemplary process chain of Figure 4, the producer produces and/or is
supplied with produce (step 401). The producer then registers for the application
(step 402), they may register via a mobile telephone, which provides them with
the current market price of the goods that they wish to sell (step 403). This
application allows the producer to use a unique identifier (UIO) to authenticate
20 themselves and to set up a linked mobile device-based bank account. Additional
levels of authentication, such as providing biometric information can also be
incorporated into the system.
The producer then decides whether they wish to deliver the goods to market
25 themselves or to have them collected by a produce aggregator (steps 404 and
405). Irrespective of either method of distribution, chosen payment for the goods
is made at the point of collection/sale and the producer is authenticated by the
UIO (as has already been substantially described), and/or by biometric data if
this is supported (step 406). The produce is then sent to the market for
30 distribution (step 408).
Payment (step 407) is made either directly to the producer's mobile-based bank
account via a third party payment network (step 409) or payment can be
-12-
deferred to allow the producer to barter for goods (step 410). Alternatively, there
may be partial payment and partial deferment to allow for bartering (step 411).
A payment network (as described above with respect to Figures 1 to 3, for
example) can also be utilised in supporting and carrying the UID/biometric data
5 required for payment authorisation.
Once the farmer has received his funds, he can pay wages and suppliers from
his mobile. Once labourers receive their wages they can make cross-border
funds transfers to family and friend utilizing their mobiles.
10
This system allows for the flexibility for payment of labourers, where appropriate,
either with monies, which can then be remitted to their families, or with food. It
also supports indigenous bartering networks within rural communities.
15 This system ensures that the farmer is not ripped off by the intermediary as is
often the case. This in turn results in a higher standard of living and financial
inclusion for the rural poor. There would also be the opportunity to provide
additional services such as insurance etc., as the farmer/merchant becomes
more prosperous as a result of this system.
20
Such a system has the following further advantages:
• Allowing any bank to participate, the bank has a greater reach and
to include previously unbanked segments of the population.
• End to end transaction process - simple reconciliation & payment.
25 • Instant remuneration - electronic payment.
• No manual intervention.
• Paperless.
• Automated process.
• Data accuracy (From produce delivery, price and payment).
30· Build strategies, based on peaks and troughs (prepare for out of season
or low production periods).
• Greater employment, as a result of reasonable/controlled pricing (farmer).
• Plan relevant distribution, rural vs. domestic.
-13-
• Promote healthy economy.
• Subsidies can be controlled and distributed based on relevance.
• Stop leakage - combat the inappropriate use of funds.
• Better control.
5· Better records, allowing farmers to apply for loans easier and stand a
better chance of a loan approval.
• Assist with building strong communities - clubbing together to receive
scalable advantages.
• Resources are freed up - previously doing manual payments and
10 counting money will no longer be required.
The flow charts and descriptions thereof herein should not be understood to
prescribe a fixed order of performing the method steps described therein. Rather
the method steps may be performed in any order that is practicable. As used
15 herein and in the appended claims, the term "payment card account" includes a
credit card account or a deposit account that the account holder may access
using a debit card. The term "payment card account number" includes a number
that identifies a payment card account or a number carried by a payment card,
or a number that is used to route a transaction in a payment system that handles
20 debit card and/or credit card transactions. The term "payment card" includes a
credit card or a debit card. Although the present invention has been described in
connection with specific exemplary embodiments, it should be understood that
various changes, substitutions, and alterations apparent to those skilled in the
art can be made to the disclosed embodiments without departing from the spirit
25 and scope of the invention.
-14-
'I
.~..

WE CLAIM:
1. A commodity pricing transaction system comprising:
a first secure server arranged to store unique identification (UID) data
5 corresponding to a plurality of persons;
a transaction network arranged to mediate at least a portion of
transaction data corresponding to a transaction between a first of the plurality of
persons and a second of the plurality of persons;
a first data entry device associated with the first of the plurality of
10 persons; and
a second data entry device associated with the second of the plurality of
persons;
the first data entry device arranged display pricing data of a commodity
that the first of the plurality of persons wishes to sell;
15 the first data entry device being arranged to receive UID data
corresponding to the first and second of the plurality of persons along with an
agreed pricing data for the commodity;
the second data entry device being arranged to receive UID data
corresponding to the second of the plurality of persons and an actual selling
20 price of the commodity; and
the transaction network being arranged to communicate transaction data
between respective accounts of financial institutions linked to the first and
second of the plurality of persons such that the transaction is effected, based
upon the verification, at the secure server, of the UID code of the second of the
25 plurality of persons received at the second data entry device.
2. The system of Claim 1 wherein the first data entry device comprises at
least one of the following: a keypad, a biometric fingerprint scanner, a biometric
iris scanner, a biometric voice recorder, a barcode scanner, a QR code scanner.
30
3. The system of either Claim 1 or Claim 2 wherein the UID data of the first
of the plurality of persons comprises anyone of the following: biometric data, a
UID number, a barcode, a QR code.
35 4. The system of any preceding wherein the second data entry device
comprises at least one of the following: a keypad, a biometric fingerprint
scanner, a biometric iris scanner, a biometric voice recorder, a barcode scanner,
a QR code scanner.
40 5. The system of either any preceding claim wherein the UID data of the
second of the plurality of persons comprises anyone of the following: biometric
data, a UID number, a barcode, a QR code.
6. The system of any preceding claim wherein the respective accounts are
45 linked to the UID data of the first and second of the plurality of persons.
7. A method of effecting a commodity pricing transaction comprising the
steps of:
-15-
i) storing unique identification (UID) data corresponding to a plurality
of persons upon a secure server;
ii) mediating at least a portion of transaction data corresponding to a
transaction between a first of the plurality of persons and a second of the
5 plurality of persons via a transaction network;
iii) displaying pricing data of a commodity that the first of the plurality
of persons wishes to sell, at a first data entry device associated with the· first of
the plurality of persons;
iv) receiving UID data corresponding to the first and second of the
10 plurality of persons along with an agreed pricing data for the commodity at the
first data entry device;
v) receiving UID data corresponding to the second of the plurality of
persons and an actual selling price of the commodity at the second data entry
device; and
15 vi) communicating transaction data between respective accounts of
financial institutions linked to the first and second of the plurality of persons via
the transaction network such that the transaction is effected, based upon the
verification, at the secure server, of the UID code of the second of the plurality of
persons received at the second data entry device.
20
8. The method of Claim 7 comprising .linking the respective accounts to the
UID data of the first and second of the plurality of persons.