By Satyajeet Limaye, Chief Strategy Officer, Bankit
The digital payments ecosystem in India has come of age in recent years with the pandemic fast-tracking the process of digital payment adoption. An increased number of citizens, even those residing in non-metro cities and India’s hinterlands have begun to make the shift to cashless transactions through methods such as Unified Payments Interface (UPI), Aadhaar-enabled Payments System (AePS), Internet Banking, and more. According to a report by KPMG, India is expected to witness a 78 per cent increase in digital payments in the upcoming months.
However, as the country gravitates towards more digital payments, it is important to understand the challenges that come along with it. One of the biggest challenges and most important aspects when it comes to digital payments is security. In today’s tech-powered world, strengthening cybersecurity to build a secure digital payments ecosystem is imperative. On that note, let’s take a look at how and why digital payment security has become mandatory in today’s world.
Prevention of fraud and facilitating financial independence
As the digital payments segment in India achieves rapid growth, fraudulent activities such as hacking, threats, theft, etc., are also on the rise. Improving cybersecurity for secure, encrypted digital payments will allow even marginalised communities, especially those who cannot afford any instances of fraud, to become financially independent. They will no longer need to depend on cash transactions and can utilise digital payment methods, thereby encouraging financial inclusion across the country.
Reduced technical failures and easy traceability
Bolstering cybersecurity to enable secure digital payments can greatly minimise technical glitches and failures, ultimately optimising the time, cost, and manpower spent on fixing the glitches. Furthermore, secure systems can also trace each transaction easily, thereby offering added security and making it harder for criminals to tamper with payment gateways.
Establishing customer trust
In a cash-based economy such as India, it is natural apprehension to prevail around digital payment modes, which was the case up until recently. Although the country’s urban population has largely shifted to digital payments and the non-metro/rural population is gradually following, the shift to digital payment methods is slower when compared to other countries. One of the key reasons for this is the lack of trust in the security that digital payments offer. However, increased payment security can help gain customer trust and help in the conversion of the skeptical population to adopt digital payment solutions.
Today’s digital payment methods have become efficient to the point where they are completed in a matter of minutes. To further enhance the convenience and leave no room for doubt in customers’ minds, biometric security and digital identities have helped boost payment securities. The incorporation of cutting-edge technology to strengthen infrastructure in the same will help create a digital payments ecosystem that is seamless and secure.
Minimal transaction costs
Aside from the above-mentioned, secure digital payments can go a long way in helping stakeholders reduce the cost per transaction. The main reason for this is that secure payment systems are protected against unauthorised access and do not allow any chance for fraud. Fortifying these will enable India’s digital payments ecosystem to become more efficient, further bringing down the transaction costs and benefitting merchants and consumers alike, and allow them to perform transactions online without worrying about threats to their money.
In a nutshell, it is evident that as technology progresses, the need for enhanced cybersecurity for digital payments is also increasing. As the benefits of digital payments outweigh the risks, creating a highly secure and efficient digital payments ecosystem in the country have become mandatory. With the government encouraging citizens to shift to digital payments from cash transactions in light of the ongoing pandemic, it is expected that fintech players, as well as the government, will work towards the betterment of the segment, making them an inseparable aspect of our lives.