Editorial

Redesigning awareness strategy against digital payment fraud

Digital payments in India are projected to increase substantially this year due to rapid increase in number of smartphone users and government’s push for promoting digital payment ecosystem.

Sentinel Digital Desk

Digital payments in India are projected to increase substantially this year due to rapid increase in number of smartphone users and government’s push for promoting digital payment ecosystem. The spectacular growth of digital payment ecosystem demonstrates India making significant advancement in digital economy and rapid expansion of e-commerce in the country. Official data shows that financial frauds constitute more than 60% of total cybercrime complaints. Addressing the problem is crucial to check the erosion of confidence of digital payment users in the online payment ecosystem. The Parliamentary Standing Committee on Communications and Information Technology has pointed out that punitive measures are long drawn, time consuming and less effective and has suggested adoption of multipronged approach to deal with the problem. The Committee underscores the importance of focusing on preventive measures. Due to delay in meting out punishment to fraudsters involved in online financial fraud of siphoning money of account holders and duping digital payment users, actions against fraud often does not have a deterrent effect against occurrence of fresh incidents. Besides, as some of the cybercrime gangs involved in the financial and other cyber frauds are operating from their bases in foreign countries, taking prompt and direct action against them is often not possible. Raising awareness among digital payment users, therefore, remains the most effective approach apart from strengthening safety protocols of digital payment ecosystems. Some of the safety measures already initiated by the National Payments Corporation of India (NPCI) which operates UPI payment system include linking the customer’s mobile number with the device which is used for digital transactions so that the transaction cannot be done from any other device; use of two factor authentication where a UPI pin is also needed to complete the transaction to ensure that even when a customer’s mobile is stolen, transaction cannot be carried out from the stolen device as the UPI pin set by the customer would not be known to the criminal; display of payment message prominently on the device screen before entering of the UPI pin to confirm that it was the customer who had initiated transaction. While for those having adequate digital and financial literacy such measures are effective as they will set the PIN number and will not share with anyone else. The bigger challenge, however, lies in addressing the low level of awareness among a large section of people who have been introduced to the digital payment ecosystem primarily as recipients of Direct Benefit Transfer or other benefits involving digital transactions under various government schemes and programmes. Their transition from visiting brick and mortar bank branch for transaction from their accounts to digital payment system happened so fast that a large section of them continue to share their PINs with others to help them carryout the transactions in good faith and are not aware of the risk of sharing it. These are the same customers who would request a stranger in an ATM to help them withdraw cash or checking balances and do not hesitate to share the PINs as they are not financially educated to use the ATM card on the machines on their own. The rise in online financial frauds, therefore, raises questions on effectiveness of same campaign strategy for different section of digital payment users with different levels of awareness. A comprehensive survey with objectives of segregating users based on their financial literacy level can be useful in designing different campaign strategies targeting segregated digital payment users for optimal outcomes. The parliamentary panel also raised concern over rise in cases of fraud using Aadhar enabled payment system (AePS) which facilitates customers to carryout financial transactions from the Aadhar linked accounts. Information provided by the government to the Committee reveals that such fraud is committed by criminal gangs by way of biometric cloning using dummy fingers or rubber fingers to withdraw money. It is reassuring to know that the Ministry of Home Affairs apprised the parliamentary panel that there has been no breach of Aadhaar card holders’ data from the Central Identities Data Repository maintained by the Unique Identification Authority of India (UIDAI) in which the data base of biometric and demographic information of Aadhaar is maintained. However, the government agencies concerned putting an end to fraud in AePS expeditiously is essential to reassure the customers about digital safety of their financial transactions using the Aadhar card. Technological upgradation and regulatory measures play crucial role in addressing the challenges faced in preventing digital financial fraud through application of latest technology. Digital payment system has brought more transparency in financial transactions and ensuring its safety is vital for protecting country’s economy. Government and financial institutions reviewing current approach towards awareness building among digital payment users and online banking customers and designing different campaign strategies for different sections of customers is an urgent need of the hour.