Digital payments in India have grown exponentially in the last few years on back of several factors including launch of UPI (unified payment interface) and is likely to double to USD 135.2 billion by 2023. However, the flip side is that along with the growth in digital payments, there has been a steep rise in frauds too, which is why the Reserve Bank of India (RBI) has decided to set up a Central Payments Fraud Information Registry.
Indian FinTechs that have helped facilitate the growth of digital transactions have welcomed the move by the central bank saying that it will boost trust among the customers thereby increasing the volume and value of the transactions and at the same time putting a check on the frauds that have also increased despite the RBI’s effort related to security and risk mitigation. According to data provided by the RBI, over 6,800 cases of bank translating to a value of INR 715 billion have been reported in 2018-19.
“…a centralized fraud registry will help to hedge the risk of loss due to frauds and help RBI establish a trust with customers who are hesitant to delve into digital payments. It will create a safe and robust banking ecosystem which is a pre-requisite to improve economic growth prospects for India,” said Anand Kumar Bajaj, Founder of PayNearby. The startup is also running a retailer education program called “Swachh transaction, Swachh Bharat” , which means “Clean Transaction, Clean India”.
At present, digital payments frauds make up for more than half of all bank related fraud cases.
While announcing the creation of a central payments fraud information registry on Wednesday, the RBI said that it would ensure quick and systemic responses in cases of financial frauds. Currently, there is a mechanism in place for banks to report all banking frauds to the Central Fraud Monitoring Cell and that the proposed dedicated registry will further enable this process.
Participants in payment systems will be provided access to this registry for near-real time fraud monitoring. The aggregated fraud data will be published to disseminate information on emerging risks, RBI Governor Shaktikanta Das said while making the announcement.
“India still has a very high usage of non digital channels to transfer money as the end users are still not fully confident about the security of this channel. With periodic risk reports being published for individual payment operators, customers would be aware of potential risks associated with each channel and at the same time make the processes more transparent for the customers, encouraging them to use these services smartly,” said Abhishek Gandhi, Co-Founder & CFO, RupeeCircle
To this Dewang Neralla, CEO, Atom Technologies added that while it is a great move, the companies are hoping that the merchants are also included and not just the consumers.
Publication – IBS Intelligence
Published Date – August 8 2019