What is the Importance of Cybersecurity for Digital Payments?

Introduction

UPI frauds skyrocketed to over 80 percent in FY24. Worse, With over 208.5 billion digital payment transactions recorded monthly in India alone (RBI, 2024), cyber threats are growing just as fast. As users are increasingly getting used to UPIs, digital wallets, and online banking for optimal transaction convenience, the risks of sophisticated financial fraud are looming large. The advent of everyday AI has further elevated the risk factor with deepfake audio, videos, and images, and fake bank fraud warnings, to name a few. Thus, the significance of cybersecurity for digital payments is more important now than ever. India, being the major driver of digital payments, holds both promise and challenges for its fintech sector. To counter the emerging security issues of electronic payment system, a robust cybersecurity mechanism comes as the first line of defense. This blog entails a detailed analysis of the cyber risks and their impact on the future of digital payments.

Rise of Digital Payments Frauds

Innovation in the payment landscape surfaced and skyrocketed with smartphones fast becoming the go-to convenience mode of entertainment and bill payments. On the flip side, increased adoption of multiple payment modes - such as cards, wallets, UPIs, and QR codes - has abetted fraudsters with unprecedented opportunities to exploit digital payments and human mind or emotions. According to an alarming report by the Ministry of Finance in the Rajya Sabha, India suffered massive financial losses to digital fraud, mounting a whopping ₹4,245 crore in the first 10 months (April–January) of 2024-25. Considering the escalating cyber risks in digital payments, involving multiple stakeholders - such as banks, payment gateways, merchants, buyers, and sellers - an impenetrable cyber defense is the need of the hour.

Types of common digital payments frauds

If you are an avid user of digital wallets and UPIs, you must be aware of the potential risk in electronic payment system in e-commerce and online transactions. Let’s discover some lurking threats that can disrupt your online payment convenience:

1. Identity Theft
Fraudsters and cybercriminals steal users' personal details from ID cards (in India PAN/ AADHAAR) and even social media credentials to gain unauthorised access to their bank accounts. Once they get the access, they initiate transactions (unbeknownst to the users) to steal from the victims’ accounts. Threat actors even trade these details on the dark web, enabling foreign fraudsters to access your account.
Safety Tips: Don’t share your ID details, ATM PINs with random callers, even if they pose as representatives from your bank. Banks never ask for such confidential details over the phone.
2. Phishing/Vishing
Fraudsters’ favorite psychological manipulation techniques involve sending malicious link-bound texts, WhatsApp messages, and emails to the targets. At times, these messages or mails appear to be coming from a person whom the user already knows. The process is called Social Engineering Attack. These tricks confuse customers, who might end up clicking on the link and sharing details.
Safety Tips: Don’t open such texts and emails from unknown, suspicious numbers, and unverified mailers. Even if the mail seems to be coming from a person you know, double-check the sender id for discrepancies.
3. Masked QR codes
Fraudsters are now prying on the growing trend of scanning QR codes for instant payments. To exploit this convenience, criminals send fake QR codes to the target, luring them into monetary credit on scanning. These malicious codes are hard to detect. Hence, once scanned, the amount gets deducted from the customer’s bank account. In some cases, fraudsters are also masking original QR codes with their own QR codes at shops and stores, deceiving customers into paying into the wrong account.
Safety Tips: Confirm a QR code and bank account details before making any UPI payment to a shop.
4. Web Skimming
This money-robbing technique involves installing malicious software on the payment checkout pages in apps or websites. The motive behind this is to obtain users’ card details, especially on the popular e-commerce websites.
Safety Tips: Don’t save your card details even on the most trusted e-commerce sites.
5. Account Takeover
Fraudsters take illegitimate control of users’ bank accounts and change the original details before making payments. Most of the time, such changes go unnoticed by the users before they even realise the impact.
Safety Tips: Don’t engage with spam calls that ask for KYC and OTPs.
Considering these growing instances of cyber financial fraud, an obvious concern arises - how safe are digital transactions.
While risks are always lurking, there should be more emphasis on cyber security measures to combat these threats.

Cybersecurity for digital payments

Ensuring optimal security of digital payments in India requires not only a robust cybersecurity framework but also general awareness. Now, let’s understand how effective cybersecurity contributes to a stronger defense in mitigating the nuisance:

1. ML in Action
Integration of ML in cybersecurity helps to analyse a vast amount of transaction data to identify unusual transaction patterns in less time than before. The cutting-edge ML technology is capable of detecting even the most subtle fraudulent activities that was not possible previously.
2. Real-Time Prevention with AI
Cybersecurity specialists are incorporating AI for real-time fraud detection that can quickly evade human eyes. AI’s quick and accurate fraud detection capabilities prevent fraud by blocking unusual transactions before they impact users.
3. Regulatory Compliance
Adherence to regulatory compliance is a key pillar in effective financial fraud detection. This involves a multi-faceted approach. In India, compliance with the Reserve Bank of India (RBI) regulations and the Digital Personal Data Protection (DPDP) Act, 2023, significantly helps to prevent the risks of fraud in digital payments.
While cyber experts are deploying the latest innovations for digital fraud detection, users are also required to stay informed of the evolving threat nature and defense mechanisms. Learn more about evolving cyber threats from our comprehensive information section.

Conclusion

With financial institutions adopting advanced online payment security methods to thwart financial cyber fraud, it automatically unlocks limitless avenues for aspiring cyber professionals. For all passionate cyber warriors, willing to master technology and techniques in cybersecurity for digital payments, enrolling in cyber security course with placement in india could be a game changer. Register today.