With the rise of e-commerce and digital banking, online payments have revolutionized the way we transact and manage our finances. The convenience and speed of online payments have made them the go-to choice for individuals and businesses alike. However, this increase in online transactions also comes with a greater risk of fraudulent activities. Fraudsters are constantly looking for ways to exploit vulnerabilities in the system and carry out unauthorized transactions, compromising the security of both businesses and consumers.
About 47 per cent of urban Indians have reported that they or someone in their family have been a victim of financial fraud in the last three years. A survey conducted by LocalCircles noted Among the urban Indians who have experienced financial fraud in the last 3 years, 43 per cent experienced fraud with their credit card while 30 per cent experienced fraud via UPI transactions.
The survey found: “Nearly 1 in 2 credit card fraud victims experienced unauthorised charges by domestic and international merchants and websites,” it said.
The survey of 23,000 respondents from 302 districts by Localcircles said over half of the people also experienced unauthorised charges levied on their credit cards by domestic and/or international merchants/websites.
In the case of UPI frauds, 4 in 10 of those who experienced it said that the link/ QR code sent to them to accept a payment instead led to money being debited from their account, the survey said. The study shows that the RBI, UPI and banks issuing credit cards need to put in place more safeguards to help prevent such financial frauds, it said.
“Consumer awareness needs to be created on priority for both UPI and credit card users. In addition, safeguards must be built so no Indian credit cards can be charged without an OTP authentication,” it said.
Increased consumer awareness is crucial for UPI. Alongside these measures, it is imperative to educate local police stations so their personnel can promptly assist citizens in filing online complaints. Currently, many staff members lack the skills to guide victims of online financial fraud, especially in urban areas. As a result, businesses are investing heavily in advanced security measures to protect themselves and their customers from falling victim to payment fraud.
Consumers are increasingly cautious, dealing only with trusted merchants and protecting their personal data. Despite payment fraud challenges, the advantages of online payments surpass the risks. It's crucial for all involved to stay informed and proactive in ensuring secure transactions.
A recent RBI report said new technologies enhance the efficiency and effectiveness of banking operations. “With this, however, the risks of fraud and data breaches have also increased.
Concerted efforts by all stakeholders including regulators, banks and customers are required to protect the system from these threats. On its part, the Reserve Bank has been striving to update the regulations to protect customers while ensuring that innovations are not stifled,” the report stated.
LocalCircles said the credit card data of Indian consumers is easily available for sale by thousands of data vendors across India. With personally identifiable information like PAN card, Aadhaar, mobile number, email and address easily available in databases for sale and credit cards details available with mobile number, email or address being common, anyone with knowledge of spreadsheets can join these databases to profile individuals.
“Such datasets being available in public domain make credit card holders extremely vulnerable to frauds as many international websites/apps do not require OTP authentication before charging an Indian credit card once the user has their credit card set to permit international transactions,” it said.
Nearly half of urban Indian consumers faced credit card fraud in the last 3 years. Most cases involved unauthorized charges from domestic or international merchants/websites. The survey highlighted issues like unknown international charges, domestic transactions, and other fraudulent activities besides unauthorized charges.