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By Nitya Sharma for YourStory
As the country moves towards a cashless economy, it is vital that financial institutions invest in a secure digital payments ecosystem that promotes financial inclusion, is transparent, and easy to use.
In recent years, the digital payments ecosystem in India has come of age. An increased number of consumers in the country are now choosing to make digital payments for their purchases. This growth is being driven by segments such as mobile wallets and buy now pay later (BNPL). According to KPMG, digital payments in the country are growing at a CAGR of 12.7%. This is a highly significant figure which indicates the rapid growth of the industry.
As India moves towards its goal of becoming a cashless economy, it is extremely important for us to understand the importance of secure digital payments. This article discusses the key methods being used to build a secure digital payments ecosystem and highlights why these payments are imperative in today’s connected world.
Combating the threats to digital payments
While the digital payments industry continues to grow rapidly, there are numerous threats that could hamper its adoption in the country. Some of these threats include hacking, cyber fraud, malware, and ransomware.
These threats can arise from both the merchant side as well as the buyer side. During 2018-19 alone, India recorded 1,477 instances of digital fraud. Therefore, all stakeholders must work in unison in order to negate these threats and ensure that digital payments work in a seamless manner.
Several steps have already been taken in this regard. For instance, leading fintech companies are already investing significant sums of money in order to safeguard their digital payments infrastructure. Some of the technologies that are helping these organizations in securing their transactions include 3D secure protocols, two-factor authorisation, as well as highly secure networks.
In addition to this, financial institutions in the country are also protecting their payment mechanisms by building robust cybersecurity teams. Leading banks are resorting to hiring cybersecurity professionals such as ethical hackers in order to test the strength of their payment systems. Similarly, payment processing firms are also strengthening their resources against online fraud by resorting to risk detection techniques.
The growing importance of secure digital payments
Over the past couple of years, secure digital payments have emerged as a critical component of our lives. This is because of the numerous benefits that this form of payment provides. Some of these benefits are highlighted below.
1. Promoting financial inclusion
Firstly, digital payments have become a major tool to promote financial inclusion in the country. In a densely-populated nation like India, it is not possible for banks to be omnipresent and cater to the needs of all the people. This is where digital payments can prove to be a great way to provide financial services to the far-flung.
Further, the digital payments ecosystem must be completely secure because most of the marginalized communities cannot afford instances of fraud. If implemented in the right way, secure digital payments can transform the way rural India operates.
2. Transparency and accountability
Secondly, secure digital payments also ensure a greater degree of transparency and accountability. Although cash has been used for centuries, there is little transparency in its usage. Further, it can be a complex task to keep track of your cash transactions, leaving you vulnerable against pilferages and thefts.
On the other hand, secure digital payments ensure that all your transactions can easily be traced. Similarly, secure gateways are harder to tamper with, thereby providing an extra layer of security.
3. Convenience and ease of use
Nowadays, most people do not have the time or energy to wait for their payment transactions to be executed. Instead, they want immediate payment solutions and quick confirmation messages. The advent of secure digital payments has meant that both these needs are being met.
Modern-day digital payments have become so efficient that they are completed within a matter of seconds. Further, digital payment transactions are highly secure, which ensures that consumers can attain peace of mind.
4. Reduced transaction costs
Digital payment systems that are highly secure can also help all stakeholders in reducing transaction costs. This happens because these systems are protected against unauthorized access. As these systems continue to evolve and become more efficient, the transaction costs are likely to come down even further. This could prove to be a major benefit for the consumers and merchants, who can seamlessly access funds without having to worry about external threats.
To sum up, it is evident that secure digital transactions are a given in today’s world.
The benefits of secure digital payments far outweigh any risks, thereby driving their growth. In the near future, it is likely that digital payments will become even more secure as fintech providers start to leverage advanced technologies such as machine learning and natural language processing.
These technologies will further increase the importance of secure digital payments, making them an inseparable part of our lives.
Dated: October 20, 2020