Given how allaying fears regarding security of digital transaction infrastructure is crucial to its adoption, the government has done well to moot the idea of insuring mobile wallets. The government, as per a Business Standard report, has been in talks with mobile wallet and insurance companies to thresh out a model. While awareness regarding vulnerabilities in digital infrastructure is quite low—an EY analysis shows over 40% people can’t identify such vulnerabilities—most smartphone-users don’t use security software for their devices. Thus, with mobile transactions set to reach over a trillion dollars by 2017 as per Juniper Research, considerable damage could potentially occur if existing security systems are breached. Given how even the smallest loss could undermine the adoption of the digital economy, insurance for mobile wallets thus assumes increased importance.
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The real challenge, however, would be to figure out what exactly the model for insuring wallets will be. While deposits, to which debit cards are linked, are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) and banks offer various card protection plans against phishing, PIN frauds and stolen cards, it is likely that in case of pure-play mobile wallets, such protection may not be available. Given tech security has to be a nearly continually evolving process, how insurers will see payments infrastructure such as mobile wallets is also something that isn’t clear yet. In such a case, it could fall upon the government that must ensure the less-cash economy it is pushing is not derailed.