A recent FIS study showed that online payment frauds in India have doubled in the last year, from 18% to over 37%. The largest affected group is the millennial generation (ages 27-37).
According to the FIS’ fifth annual PACE report, over 96% of Indian customers who got affected by online payment frauds had switched to a mobile app and increased their usage of online payments. Overall, online fraud has seen a six-fold increase since 2016.
Studies showed that:
- Over 46% were online banking fraud
- 39% were Facebook complaints
- 21% through mobile
- 18% through email ID hacking
- 12% were through IVR calls.
Why is there an increase in online payment frauds in India?
With demonetization, nearly a third of India’s population resorted to digital payments to continue running businesses. With different types of payments making the rounds, consumers often become too trusting with third-party payment service providers. Some of the most common reasons why online payment frauds are:
- Stolen card details are easy to buy. Credit and debit card information can be easily cloned when a customer leaves it unattended in a store/restaurant.
- Frequent calls pretending to be a customer care agent from your bank, asking for sensitive information.
Why are Millennials the most affected?
Mobile payments are rapidly gaining traction among millennials.
For instance, millennials adopted mobile payments as a means to have a more user-friendly experience. They are in fact the largest audience in terms of online payments. Additionally, they also make one online transaction daily. While browsing online, millennials might accidentally open an unsecured website that could steal sensitive information.
Types of online payment fraud in India:
Banks repeatedly ask customers not to share sensitive information with third parties. Despite this, hackers weasel a way to illegally obtain information online. Hackers may also pose as legitimate representatives and contact credit card owners asking for sensitive information. Some of the most common types of online fraud in India are:
Phishing is the process of accessing a customer’s personal information through fake e-mails or websites. For instance, these hackers pretend to be representatives of the users’ banks and get them to reveal sensitive information. Any emails or websites that require personal or private information such as credit card information, bank account/login credentials can fall prey to phishing in that case. Additionally, phishing can also take place through SMS.
Through this fraud, hackers reroute traffic from online stores/websites by hijacking part of it and directing visitors to a different website. The unwanted site may also contain potentially malicious material that hackers use to enter a security system.
3. Advance Fee and Wire Transfer scams
Hackers target credit card users, online payment account holders, and online store owners by asking for money in advance in return for a credit card or money.
4. Merchant fraud
This method involves hackers setting up a merchant account using a legitimate business site and charging stolen cards. In brief, the hackers steal the information and disappear from the online space before the cardholders discover the fraudulent payments. Moreover, this could also affect a merchant’s credibility via chargebacks.
How are payment gateways tackling online payment frauds in India?
Presently, payment gateways are taking the extra step to ensure that all digital payments are safe. As a result, safety measures for businesses and individuals have increased with the introduction of UPI and wallets,
Some of them are:
- Encrypting transactions and emails containing confidential information
- Ensuring that customer login credentials are changed on a regular basis.
- Establishing rules with regard to confidential information access.
- Running frequent security checks using secure antivirus software.
- Verifying the legitimacy of a merchant by running multiple background checks
Instamojo has developed foolproof methods to ensure safe and secure payments for all online users.
Instamojo online payments are compliant with Payment Card Industry Data Security Standards as a measure to make sure that the transaction data is 100% safe.