In a recent incident, PayPal?the online payment system?suffered a global outage that lasted for about an hour. This caused a loss of about $7.2 million in commerce, besides time and energy wastage. In India too, the e-commerce industry has to gear up itself for the slowdown in the number of transactions, which owes its origin in the recent RBI notification which mandates that every usage of credit cards online has to go through an extra layer of security. Credit card users will now have to register with the issuing bank for an additional PIN. Though the move aims at reducing the level of online fraud, it would severely impact the volume of online transactions.
In the present e-commerce environment, banks are merely payment enablers and the fraud risk is borne entirely by the merchant site and neither by the banks nor by the card companies. Also, banks/card companies, who were consulted while preparing the guidelines, haven?t even initiated their bit of job in educating the customers about the change. Hopefully, with a steep fall in credit card transactions online, banks will soon start informing their customers.
E-commerce in India is still in nascent stage, but even the most-pessimistic projections indicate a boom. Online fraud in India is just 0.16% of the e-commerce industry and India doesn?t even feature in the top 10 countries, which account for 95% of online fraud reported worldwide. As per the Internet Crime Complaint Center, US and UK are the largest online fraud perpetrating countries. International cards?the largest perpetrators of fraud, will not be governed by this directive, and thus we can expect little respite from online card fraud even with the directive. The days when retailers had websites acting as mere shop windows for their goods and services are clearly over and the ability to reach customers via the internet has grown. However, there are certain challenges such as standardising policies across states and introducing a dispute redressal mechanism that remain to be tackled before e-commerce becomes an asset for the common man.
?jaya.jumrani@expressindia.com