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Why Is Security Still A Concern For Further Growth Of Digital Payments?

Why Is Security Still A Concern For Further Growth Of Digital Payments?

Innovative and disruptive technologies will play a pivotal role in bolstering security of online transactions

Adopting new methods of payments like contactless cards, QR codes and tokenization can help in mitigating risks

Creating awareness and Sensitizing users are equally important to avoid potential risk

In the wake of the Covid-19 crisis, cash transactions have witnessed a steady decline as the nation remained in lockdown and given the potential spread of infection via cash or currency notes. As people and businesses continue to practice social distancing and look for safer and contactless ways of transacting, it is safe to say that digital payments are rapidly becoming an essential part of our lives.

A recent consumer survey highlights that Indians including even those in the older age groups are rapidly adopting digital payment modes amid the Covid-19 crisis. As per the study, the usage of digital payments among Indian consumers across age groups was the highest at 75% in the current scenario, followed by the global average at 45%.

However, as an increasing number of people begin to adopt digital payments for the long haul, it brings us to an underlying question: how can we make digital transactions more secure? With our sights set on becoming a ‘less-cash’ economy in the future, the sudden push to ‘go digital’ will extensively test the existing security and fraud control frameworks.

Data breaches of different sizes happen daily, and users are constantly at risk of compromising personal information and losing money. The most widespread threats include mobile malware, phishing attacks, duplicating SIM cards, and physical theft. Additionally, the new ways of extracting crucial financial data used by fraudsters from the digital ecosystem can leave users confused. As many as 1,477 frauds were reported with regard to ATM/debit cards and Internet Banking transactions of more than INR 1 Lakh in FY 2018–19 alone.

With a significant increase in the number of digital payments with 40% rise in cashless transactions since the beginning of this pandemic, the exposure to cybersecurity risks, such as phishing, virus attacks or malware is also increasing.

According to a recent study, global card fraud losses will exceed $35 Bn in 2020. It is therefore even more critical for organizations and governments to build awareness and ramp up security and authentication efforts. The right use of new-age technology is a must today to enhance the security of digital transactions to address the risk of fraudsters who track unmonitored, point-of-interaction, and standalone devices.

Adopting New-Age Technologies

Technology plays a pivotal role in bolstering cybersecurity. Measures like multifactor authentication by adding biometrics, dynamic authentication technologies, such as 3D Secure; and artificial intelligence and machine learning (AIML) help in detecting and containing fraudulent transactions faster and quicker.

Adopting new methods of payments like contactless cards, QR codes and tokenization can also help in mitigating risks and making digital payments simple and secure. With its tap-and-go technology, contactless card transactions offer a faster and safe approach to digital payments. Similarly, QR codes are secure and inexpensive and can be used not only at stores but also on ecommerce platforms and on instant messaging apps.

On the other hand, tokenization allows payments to be processed without exposing actual account details and a unique digital identifier – called a token – replaces the 16-digit account number.

These latest technologies facilitate advanced intelligence to assess behaviour patterns and create a layered defence against the unauthorized person to access information and avert online frauds. While 3D secure technology improves authentication for e-commerce and m-commerce environments, algorithms powered by AI/ML proactively pick up any irregularity in the payment flow and alert a bank in real-time.

With an aim to reduce response time and contain threats, the effective use of AI and ML-enabled systems can easily predict any irregularities in the payment process and take the right preventive measures at the right time.

Sensitizing End-Users

Sensitizing users about the safe usage of new platforms is also essential to raise awareness about potential risk and the safe way to transact. Fraudsters tend to exploit users’ lack of awareness through various targeted attacks that include identity impersonation and phishing for sensitive information.

It’s extremely important for people to not disclose their OTPs and other payment details freely. Malware attacks are yet another big concern in India. It can access emails or banking details, as well as credit card-related information and cause serious data breaches.

One of the key ways to offset this issue is for enterprises to amplify efforts towards building digital financial literacy among internet users.  And, people should be cautious while opening any suspicious emails or attachments that can give hackers access to the device and information stored on the device.

Acting In Concert

One of the key drivers for deploying adequate cybersecurity measures includes a robust regulatory and customer redressal framework. The Reserve Bank of India’s (RBI) Central Payment Fraud Registry publishes data on fraud to make users aware of emerging risks.

Such a framework not only strengthens digital security but also enables the trust and confidence of customers. RBI has also issued guidelines involving ATM transactions, card transactions and internet banking as security and risk mitigation measures for digital payments.

The current situation faced by the world today has indeed accelerated the adoption of digital payment solutions, drawing more attention to the criticality of safety and security in the world of payment landscape. And, we are sure to see more innovation and disruption in this space.

After all, the consumer, today, expect an efficient digital experience backed by robust security solutions with every transaction they make. As the playing field continues to change, the established market players will have to constantly evolve and bring in new technologies to drive the goal of becoming a truly ‘less-cash’ economy.

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.