By Ibrahim H. Khatri
India has witnessed a staggering surge in digital payment volumes, averaging an annual growth rate of approximately 50% over the last five years. Notably, the expansion has been even more rapid, reaching around 160% annually, in India’s distinctive real-time, mobile-enabled system — the Unified Payments Interface (UPI).
In the fiscal year 2023, the country recorded nearly 114 billion digital transactions, with a total of 7,422 crore digital payment transactions in FY22. Digital payments in India sustained robust year-over-year growth of 58% in FY 2022-2023 compared to the previous fiscal year. UPI continues to spearhead this growth, constituting over 75% of retail digital payments in India. This surge in online transactions is hailed by experts across financial sectors as it increases transparency in the system, which is pivotal for a fast-growing country like India.
However, while digital transactions are highly convenient and largely secure, it’s always safer to exercise caution while making online payments in view of the increased cases of cybersecurity breaches and the sophistication with which fraudsters are manipulating the mechanism. Therefore, in order to enjoy the undeniable convenience of engaging in online transactions, here are a few strategies that alleviate the risks of making digital payments:-
Comprehending the risks
Malevolent actors exploit vulnerabilities within digital payment systems to extract sensitive information. This pilferage of sensitive information can not only lead to financial losses but also result in identity theft. Thus, the initial step in risk mitigation involves a comprehensive understanding of potential threats.
It is imperative to be cognisant of how instances of data breaches lay bare personal details. Additionally, a user must also recognise that inadequate cybersecurity measures can jeopardise the confidentiality of information and leave systems vulnerable to malicious attacks.
Significance of Digital Personal Data Protection Act, 2023
The Digital Personal Data Protection Act (DPDPA) of 2023 plays a crucial role in bolstering compliance measures. It focuses on keeping personal information safe in the digital world. The Act looks after how digital personal data is managed, balancing people’s rights to protect their information with the need to process data legally.
Meanwhile, getting permission from users for specific data tasks gives people control over their data. The Act also gives users the right to see, change, or take back their permission for their stored data. This law will affect how companies in finance manage risks since they rely on customer data to understand various risks, like credit, insurance, and fraud. The DPDPA requires companies to assess how they collect data, the legal reasons for it, and to make sure customers agree, which could impact how risks are evaluated.
Prioritising data privacy and ensuring its protection
Data privacy involves managing who can access and use your personal information. To protect your data privacy, be careful about sharing personal details online and make sure you have secure networks and devices. Besides, one should choose digital wallets or payment apps that don’t share card information with merchants. A good way to do this is by going for reputable payment providers and platforms. Also, regularly check your accounts for any unusual or suspicious activity. Lastly, monitor your accounts and transactions and limit your exposure and liability.
On the other hand, one should always employ robust, unique passwords for accounts and preferably use a password manager to ensure data protection. This is important as data protection involves shielding data from unauthorised access and breaches. It is also a must to activate two-factor authentication whenever feasible for an added layer of security.
Strengthening cybersecurity
Effective cybersecurity measures act as a bulwark against diverse online threats. Therefore, it is suggested to keep devices and applications updated to leverage the latest security patches. Users must go for a trustworthy security solution, offering real-time protection against malware and phishing attacks. Not to mention, one should avoid conducting transactions over public Wi-Fi networks for security concerns.
How AI makes digital payments safer
Artificial intelligence (AI) plays a cardinal role in securing digital payments. Its advanced predictive analytics and ability to handle lots of data make it a powerful tool. Organisations can use AI to analyse a large amount of transaction information, spotting patterns and detecting fraudulent activities. This not only helps in making digital payments safer but also contributes to efforts against money laundering by keeping a tab on millions of transactions for any suspicious behaviour.
Keep yourself informed
Stay abreast of the latest scams and tactics employed by cybercriminals as awareness can serve as a potent weapon in the ongoing battle against cybercrime. Even as digital payments offer unparalleled convenience, there are potential risks. By prioritising data privacy, ensuring robust data protection, fortifying cybersecurity, staying informed, and leveraging the capabilities of AI, users can effectively mitigate these risks and engage in digital payments securely.
The author is CEO and founder, Privezi Solutions
