On March 3, the President signed an ordinance on UID, nominally identified as the Aadhaar Amendment Bill, seeking to recover lost ground on the pronouncement of the final order on a clutch of cases on the long-disputed identification scheme, branded Aadhaar, run by UIDAI.

While many of the petitions against the scheme sought its immediate shutdown (note: this author had also filed such a petition), the court, in the majority opinion of the five-member bench hearing the matter during 2017, determined that it could continue to be used for welfare and that the income tax authorities could also use it for justifiable purposes. However, both these purposes serve the government, according to arguments made in the course of the hearing, and virtually all usage by private entities was ruled illegal (the full text of the judgment runs over a thousand pages, so this is a very brief summation).

Removing the right to usage of UID by private parties knocks off one of the major reasons that the UIDAI, as originally set up, was able to accelerate the use of the specialised pieces of software that form the package of computer tools that make using the UID possible at all. Importantly, for those individuals and companies who got involved, the ability to use the existence of a single digital identifier for financial transactions was going to be a huge source of profit going forward. Calling it ‘the new oil’, for instance, is a rather open pointer to enormous wealth creation for the companies building financial enabling tools.

With the promulgation of this ordinance, this possibility has been reopened.

Right on its heels, the UIDAI announced on March 8 that it is implementing a two-tier charging system for the use of references to the CIDR (Central Identities Data Repository) database of personal information it maintains, which have hitherto been free. Firstly, for the vast number of welfare recipient payments, a charge of 50 paisa per authentication will be billed. Now, as has been widely written about, the UID system of biometric authentication continues to be highly problematic, given issues with both connectivity and availability of electricity in rural areas (in fact, almost anywhere in India other than Mumbai). For welfare service delivery people, struggling to deal with the real problems of hundreds of millions of poverty-stricken families, workarounds have already been developed, and the need for actual authentication minimised. Naturally, this means that the problems of diversion that were theoretically the need for forcing UID registrations are also not being addressed.

The second tier of charges is for e-KYC, the near instant authentication of the user of a payment system. Here, the charge is a whopping Rs 20 per authentication. The businesses that need such authenticators are, for the nonce, VC-funded. So, they can probably absorb some of this cost, without passing it on, at least not immediately, to heavy users. This is much the same as has happened with credit cards, which attract both system charges and GST. The latter is being billed to cardholders, but usage costs are often waived by large vendors, who get relaxations from card companies in return for the volume of business they generate.

As is widely known (and innocently denied by UIDAI), the database is infected with ghosts, partly because the enrolment software itself was compromised. These ghosts might cause some pain to payment system vendors, and might cause more pain to UIDAI. The levy of such heavy user charges is likely to bring about some rationalisation, to ‘adjust’, as we like to say, the use of authentication.

Payment system vendors may look for ways and means to absorb the operating costs of frauds, by avoiding or minimising authentication for ‘good’ users. The real cost of ‘ghost’ users is not easy to evaluate, and may only become known (credit card system fraud rates, that some estimates place at 0.06-0.07%, is a pointer) once the payment system vendors and operators whittle out fraudulent users to a manageable level, the painful hard way. To sweeten the pill, though, the tax department has been leaned on to coerce PAN holders to register (‘link’) their UID numbers, which might result in easing the impact of ‘ghosts’ using these payment systems, since the vast majority of payment system users might also be expected to be taxpayers. As the old saying goes, there’s more than one way to skin a cat.

The writer is a technologist, an activist for personal privacy protection, and one of the petitioners in the Supreme Court against the Aadhaar scheme