Ease of payment vs online frauds: The pros and cons of using digital payment options

By: |
December 11, 2019 3:14 PM

Although, digital payment apps make transactions very convenient and rewarding, but there is a dark side to it – online frauds, which are alarmingly on the rise.

digital payments, online frauds, demonetisation, debit cards, credit cards, cash transactions, digital wallets, Paytm, Mobikwik, NCPI, UPI, Bhim UPI, Google Pay, Amazon Pay, PhonePe, identity theft, phishing, account theft, CVV, OTPWith the advancement of digital payment technology, the fraudsters are also getting smarter and adopting various methods to siphon out money from bank accounts and wallets.

From all-cash transactions to digital payments – India has covered a long way to become a less-cash country with substantial number of users of smart payment options. From withdrawing money from banks through withdrawal slips to cheques to automated teller machines (ATM) – even change in the mode of cash transactions took a long time to evolve.

Apart from its use in online transactions, the plastic money, i.e. debit and credit cards, gradually started replacing cash transactions even at retails stores, while, along with advancement in communication technology, the demonetisation drive in 2016 gave a big push to the adoption of digital payment options in the country.

With a sudden pause in cash transactions due to overnight ban on old notes of Rs 500 and Rs 1,000, apart from rushing to banks to change the old currency notes with new ones, cash-starved people also rushed to adopt available digital transaction modes to buy their items of necessities.

To cope up with the change in transaction mode post demonetisation, even small retailers adopted the smart technologies to accept money digitally and sell items to survive. As a result, digital payment wallet Paytm became the biggest gainer followed by other digital wallets like Mobikwik.

Gradually, popular platforms, having strong online presence, have also started offering payment solutions, with Google coming up with Google Pay, Amazon with Amazon Pay and Flipkart providing traction to PhonePe etc. The government has also set up National Payments Corporation of India (NPCI) to govern the transactions through Unified Payment Interface (UPI).

Set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks Association (IBA), NCPI is an umbrella organisation for all retail payments in India, and has also come up with its own payment interphase – Bhim UPI.

The digital wallets allow you to transfer cash into the integrated wallet via online banking, debit cards and credit cards, and for some wallets like Paytm, even by depositing cash via select banks and partners. The money in the digital wallets may be used to pay for a number of goods without using hard cash.

Without transferring the money to the digital wallet, the UPI apps allow you to transfer money from your bank account that is linked to your mobile to the bank account of another person, which is linked to his/her mobile phone, that makes transactions even more convenient. Some digital wallets like Paytm are also offering the feature of account-to-account direct transfer now.

Such apps make your life very easy, as they help you to do a hassle-free transaction for anything, without even remembering your account number or feeding account details of others in your device.

Moreover, out of the margins they get, providers of such smart payment options offer lots of deals, discounts and cashbacks to lure customers.

Although, digital payment apps make transactions very convenient and rewarding, but there is a dark side to it – online frauds, which are alarmingly on the rise.

With the advancement of digital payment technology, the fraudsters are also getting smarter and adopting various methods like identity theft, phishing, account theft and numerous other new and innovative ways to siphon out money from bank accounts and wallets, linked especially with mobile payment apps.

So, along with making payments conveniently, you need to be extremely cautious not to fall in the trap of the new-age fraudsters by clicking on any link and downloading anything containing malware, downloading any remote access app and giving access of your device to any unknown person or by sharing sensitive information like account and card numbers, CVV, OTP, etc.

You should be extra careful, as even the contact numbers and/or the links of websites, that you get through your trusted search engine, may be that of fraudster waiting to con you.

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