Biometrics Cards for ATMs Pick up Speed in Japan

Mizuho Financial Group and Japan Post are negotiating the joint development of a biometric system for their automated teller machines in an effort to prevent theft through cash card fraud, sources at the two institutions said Saturday.

The institutions hope to implement the new system during fiscal 2005, they added.

Under the proposed system, clients will be issued integrated circuit cards, which contain identifying information. A client inserts the card into the machine and places his or her index finger on a device so it can determine if the person is the cardholder. A client can only withdraw cash if the device makes a positive identification.

A person technically could place any finger on the device and still be identified according to the information stored on the card, but sources say the institutions will only record the details of a client's index finger unless otherwise requested. Veins in a finger or palm, like fingerprints or the iris, are unique to each individual and are increasingly used by security equipment at offices or airports, for example, to identify individuals.

The client will be required to input a personal identification number as well as the finger scan, sources added.

Mizuho and Japan Post have nearly 40,000 ATMs around the country.

Sumitomo Mitsui Financial Group, which has about 7,000 ATMs in the country, also is considering joining Mizuho and Japan Post's efforts, according to sources.

If that happens, the ATMs of all four major banks and post offices in Japan will be controlled by a biometric system in response to the growing number of fraud cases in which money is stolen out of clients' accounts as conventional security methods such as PIN numbers are compromised.

Bank of Tokyo-Mitsubishi already has introduced a biometric identification system in which a client is required to place his or her palm on a device before he or she can make a transaction. The same system will be used at UFJ Bank ATMs from October, when the bank comes under a joint holding company to be set up by Mitsubishi Tokyo Financial Group and UFJ Holdings.

It is not possible, however, to use cards that contain information on a person's palm at a machine that reads a person's fingertips and vice versa. Therefore, clients will not be able to use ATM cards at any major bank in the future, unlike now.

Incompatibility among such systems also means that there likely will be a race among groups to secure the industry standard, as was the case with videotapes, DVDs and other information-storage technology.

Groups employing different methods already are considering approaching many local and major commercial banks to join their systems, sources said.

Tokyo-Mitsubishi in October began distributing palm-recognizing ATM cards that are insured for up to 100 million yen in case they are stolen or damaged. The insurance now costs an annual fee of 15,000 yen, but the bank in April will begin a new plan with no such fees that covers up to 5 million yen.