Cyber Security – A Critical Challenge for the Digital Payments Ecosystem

A cyber security threat refers to any possible malicious attack that seeks to unlawfully access data, disrupt digital operations or damage information. COVID-19 has come as a jolt to many sectors, including India’s burgeoning digital payments industry. As per statista, digital payments saw a sudden hike in the times of coronavirus pandemic. Digital payments are rapidly becoming an essential part of our lives due to social distancing norms. Digital Payments is going to evolve and innovate drastically in the upcoming years.

But this change will also come with its fair share of challenges.

What are the challenges in digital payments?

1. Issues of Cyber Security

The increase in the usage of digital payment solutions has also created risks such as frauds, information theft, malware attacks, virus attacks, etc., Majority of people of India have been facing the issues of Cybersecurity. RBI has also issued some guidelines related to secure financial transactions in the country. It has also taken the necessary steps to secure card payments, Net Banking, and ATM transactions.

2. The rise in Digital Payment frauds

The rise in digital payments during the COVID-19 pandemic has also faced different kinds of online fraud.

Digital payment fraud is any kind of false transaction completed by a cybercriminal by illegally accessing the customer data.

Let’s discuss the types of different digital payment frauds :

Identity Theft – Identity theft is a fraud where the hackers steal the personal information of consumers for making illegal payments. Since the fraudsters can access the personal data of the consumer, they can easily bypass the firewalls and the e-commerce site will be unable to differentiate between the hacker and the actual user.

Phishing – Phishing is the most popular method of illegally accessing the emails and hackers will ask you to provide sensitive information such as net banking or credit card details. As the sources are unknown, your data will get hacked used in making fraudulent online payments.

Fraudulent Schemes or offers – Sometimes a fake website asks you for a little down payment and promises you to give more money after it. In this way, they will misuse your card details for making fraudulent payments.

3. Lack of digital literacy

Digital payment systems operate across hardware and software platforms like credit card payment processors and user interfaces.

Credit card-affiliated payment processors are often expensive in facilitating digital payments.

Sometimes there is a lack of interface between processing systems that can also lead to payment delays, missing transactions, and expensive fees.

How you can secure your digital payments?

Distribute the risk instead of concentrating

The demand for digital payment solutions is emerging across the globe, which requires the latest technologies and robust payment infrastructure. The government needs to store all the data to cope up with this demand, which will make the info susceptible to cyber threats and attacks, as against distributing it across different infrastructures across the globe.

Concentrated storage will also increase the risks of data theft by hackers. While on the other hand, distributed data-sets sort of a cloud can make the data less vulnerable against viruses or malware attacks and secured if one in each of the jurisdictions wherever its hold on faces threat, whereas the overall breach contained in one location by not providing access to information sets.

Moreover, while going cashless will be beneficial for the nation, it requires the rapid building of a safe and secure digital payments infrastructure to facilitate this change at the back end, which may only happen if data is allowed to flow across borders.

Provide security to end-users with a proper framework

Sensitizing users about the safe usage of digital payment solutions are necessary for creating awareness about payment frauds and risks. Fraudsters tend to take advantage of users’ unawareness through identity impersonation and phishing for sensitive information.

It’s very important for the users to not disclose their OTPs or PINs to anybody. Malware attacks are yet another serious issue for cybersecurity in India. Hackers can easily access net banking and credit card-related details via E-mails or SMS, which may cause serious data breaches.

We have to make efforts to increase digital literacy by providing end to end security to the concerned parties. The users also need to take care before opening any suspicious email or link as it may be a threat to their digital payments.

Leverage the technology to secure your digital payments

We can leverage the technology in bolstering cybersecurity by adopting new payment methods and technologies.

Adoption of new payment methods like contactless cards, QR codes, and tokenization will also keep the digital payments simple and secure.

Contactless cards are a faster and safer way to make digital payments in the times of COVID-19.

QR codes are secure and inexpensive which can be used in digital platforms and social media apps.

Latest technologies like 3D secure and biometric authentication, will create a strong defense against an unauthorized person and also improve the authentication methods.

Effective utilization of Artificial Intelligence can curb any irregularities in the payment process and take the right preventive measures at the right time.

In biometric authentication, the user’s fingerprint gets stored in a secure chip, which will match the scanned fingerprint with the stored one. The biggest advantage of biometric authentication is that the bank or merchant cannot access the data of consumers.

Wrapping Up

The COVID-19 pandemic has accelerated the adoption of digital payment solutions, drawing more attention towards the need for safety and security in the world of payment landscape. And, we are sure to see more innovation and disruption in this space.

Today we need an effective digital payment solution backed by robust security measures. The digital business landscape is constantly changing and you have to evolve and bring in new technologies to drive the goal of becoming a ‘cashless’ economy.

There are two ways of developing an app for your business, the first one is you can hire an app developer, and the second one is to extend your dedicated software development team.

Author’s BioNikunj Gundaniya, Product manager, one of the leading Digital wallet solutions, which provides mobile finance application development services. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.