Indian digital payment ecosystem needs robust cybersecurity approach

India is leapfrogging in the digital transaction space during the Covid pandemic period. And payment gateways are the major beneficiaries of this transformation. The UPI (Unified Payments Interface) transactions reflect this buoyancy. In October, the value of transactions made using the UPI crossed $100 billion in a month for the first time, according to data from the National Payments Corporation of India (NPCI).

A record 4.2 billion UPI transactions to the tune of Rs 7.71 lakh crore (about $103 billion) were clocked in the month, which is a record high both in terms of number of transactions and value for the five-year-old payments channel. Interestingly, the number and value of UPI transactions have more than doubled since this time last year. Not only UPI, but other modes of digital payments are increasing at a record pace. Immediate Payments Service (IMPS) also touched an all-time high both in terms of number and value of transactions. It clocked 430.67 million transactions worth Rs3.70 trillion in the month. Similarly, NPCI's National Electronic Toll Collection (NETC) channel, which runs FASTag, recorded an all-time high of 214.23 million transactions worth Rs 3,356.74 crore in October.

Such rapid rise of digital payments in India is also majorly driven by the burgeoning fintech ecosystem. From digital wallets to digital payments app like PhonePe, Google Pay, Paytm; Indian fintech system is evolving at a break neck speed. Consumers across the country along with big merchants to small kirana shops are adopting the digital payment platforms due to its ease in use apart from the low transaction cost.

This brings good news for the country as rise in digital payments show that the economy is formalising at a great speed. As more enterprises and people come to the fold of formal economy, it is easier for the government to keep track of the money flow. In turn, tax collection process will be easier and the growth of the parallel economy (comprising unaccounted money flow) will be restricted. The country has already achieved the feat of opening a large number of bank accounts for its citizens. Now, it is the duty of the government to keep the transaction cost at check for maintaining the momentum. With rising internet penetration and rising usage of smartphone, digital payments are all set to get further fillip in coming years. In this perspective, the aspect of safety and security of consumer transactions shouldn't be ignored. The pandemic has seen astronomical rise in cyberattack incidents. Online payments frauds are, therefore, on a rise with nefarious elements mounting cyberattacks on the payment platforms. The digital payment companies and the government agencies have the responsibilities to make users aware of the kind of threats and how to thwart such attempt.

The Reserve Bank of India (RBI) has already come up with many regulations to secure the digital payment environment. In a recent directive, RBI has mandated that PAs (payment aggregators) and merchants shall not store card credentials of customers in their database starting January 1, 2022. This is a welcome move which protects the confidentiality of customers. India's fintech revolution hinges on the proactive approach to cybersecurity, failing which the momentum will be difficult to maintain.