online payment: main concerns about online payments and ways to overcome them

In India, digital transactions grew by 33% to 7,422 crore transactions in FY22 [till 28 Feb’22 ] with UPI contributing to deals of Rs 452 crore worth Rs 8.27 lakh crore. The country has also seen a commensurate increase in all other digital payment methods such as credit cards, online banking, mobile banking, QR, etc.

With the growth of digital payments, fraud is also on the rise. About 80,000 frauds worth Rs 200 crore are committed via UPI every month, with 50% of financial frauds committed on UPI only through various mechanisms such as tricking the customer into making a payment on a Unauthorized QR or to gain trust to install malware and force the customer to use the unauthorized application. .

With the rise in fraud, the lack of robust infrastructure to detect or prevent such cases, and the lack of a redress mechanism, concerns about online digital payments are well-founded. Moreover, scammers are becoming more sophisticated day by day, using methods such as phishing, vishing, cloning/sim card swapping to receive OTP on scammers’ mobile, codes Malicious QRs, malicious apps, spoofing, etc. Ironically, bad actors are committing these crimes by leveraging the very technologies that were developed to create better solutions for consumers.

Meeting the challenge through innovation
Fortunately, there is also good news. Payment technologies are constantly emerging to keep us a step ahead of fraudsters. For example, RBI’s recent mandate on online card storage via tokenization is a very positive step in the right direction of customer data protection and security where it will be next to impossible to hack and mine the card information from the merchant, payment provider or any other ecosystem player. processing stored card information. Tokenization not only secures card information, but also increases the convenience for customers to shop online with a one-click checkout experience.

3DS2.0’s global compliance for online card payments introduces additional security and convenience by requiring the entire card ecosystem to capture more contextual consumer information seamlessly for use in online risk assessment and fraud management solutions. For example, with new card processing standards, details about customer location, device, and behavior can easily be captured for real-time decision making using credential-based authentication. risks. Advances in fraud detection and security management now allow merchants to deploy sophisticated solutions while adding convenience to customers through multiple options such as contextual authentication, step-up and degressive authentication and challenge/friction authentication versus real-time frictionless authentication. Biometrics further improves fraud management by subtly using it in the transaction journey using AI/ML techniques.

Let’s take an example here. A customer ordering groceries using the app to deliver to their saved location from their saved location should not raise suspicion, should be a direct transaction with no additional level of authentication to enhance the customer experience. On the contrary, a customer ordering groceries from a location significantly different from their registered address should raise suspicion and prompt the customer to further authenticate with an additional OTP, biometric, etc. depending on the perception of risk and the value of the transaction. This will ensure that a malicious user in possession of sensitive payment information cannot do much harm and the risk is proactively minimized and mitigated.

Advances such as synthetic identity fraud using facial recognition, deep learning, device geotagging, device fingerprinting, transaction speed checks, combined with real-time fraud detection by card, banking networks on billions of transactions can detect fraud in real time.

Despite all the advancements in technology, customer due diligence, basic security principles like not sharing credentials, not responding to malicious emails, panic calls or requests should be avoided to protect yourself .

Security and convenience will always be two sides of a coin that requires a fine balance; too many security checks and customer experience suffers, too much customer convenience could lead to lower security checks. Therefore, maintaining the right balance of a risk-based approach is always beneficial for customers, merchants, and issuing banks to minimize fraud, chargebacks, and related disputes.

The author is Vice President – Merchant Acquiring Business, Wibmo – A PayU Company.

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