Switching To Digital Mode Of Transaction – How Safe Is It?

By Mr.Saket Agarwal, Global CEO, Spice Digital

The government is encouraging us towards a cashless economy, and there apprehension in the air regarding digital transactions. India was largely a cash dependent economy, prior to digitization. Printing the currency notes is a costly business, about Rs 3.54 for each new Rs 2,000 banknote. The move to shift to the digital modes of transactions will definitely save up on funds, and lead to more accountability while bringing down the level of corruption.

Although there is an overall acceptance of the digital payment modes, there are some common queries in the mass. Then there is also an opinion that this change toward digitization has opened up prospects for cyber crimes. There is a common fear of card details, PINs, mobile wallets to be stolen and money might be siphoned off, that is ailing the people of this nation. A majority of our masses still does not have access to smartphones, computers or even internet. Technology phobia is very real a concern for such a nation of 1.3 billion.

However, the recent studies suggest that the number of ATM and Net Banking frauds in the financial year 2014-15 stood at 13,083 whereas in the financial year 2015-16, till December 2015, the figures had reached at 11,997.  Though there are risks associated with digital transactions, it is in the user’s hand to ensure that they don’t fall prey to cyber fraud. Create and frequently change passwords & PINs and enable two-factor authentication for the apps and devices both. Back up all data and erase from phone/card memory, this helps in case of loss of the device.

Another great way to make your e-wallets or other fin-tech apps safer is to refrain from logging in with social media accounts. Cross-app authentication increases exposure to greater risk, the idea is similar to keeping all keys in the same key ring, you lose your keyring, you lose safety of all keyholders. Prefer OTPs instead of ATM PIN authentication during online payments, prefer not to save card details in digital payment wallets. Ensure regular cache file cleaning from all devices. Another common practice is keeping the same password for all digital accounts, it is easy to trace and hack, keep different passwords for each. The best password practice is to set them in a series, for example, birthdays of different family members.

Digital transactions are easier to track and audit, making it easier for the authorities to curb illegal transactions. This ensures that you never lose track of money or checks owing to human error on your part or on the part of the bank. Digital transactions also help curb illegal handling of money, limiting the scope of corruption and black money. The sheer size of the Indian economy that was 98% cash based, makes it a challenge a change as big as this. The cash to GDP ratio of the Indian economy stands at 13% as compared to the global average of 2.5 to 8%.

To encourage a greater number of people to embrace digital payments, the Indian government announced in November 2016, a scheme which awarded INR 340 crore in cash on digital payments between INR 50 and INR 3,000. As per a recent release by the Confederation of Indian Chambers of Commerce, National Institution for Transforming India (NITI) Aayog has recorded a whopping 55% increase in digital payments in the year 2016-17. Mobile wallets are experiencing a steep rise too, for example Paytm’s user base has risen from 100 million to 170 million within a month. Also, the sale of Point of Sales (PoS) machines has gone 200 fold since November 8.

To sum it up, if we are negligent, we may expose ourselves to cyber crime, but the same risks are posed if you lose track of a signed check too! It takes some precautions at our end and a sound security system at the bank’s end to take advantage of the digital transaction systems that brings in a lot of ease and accountability at both ends.