Payments Competition Could Police Bank Fraud Across India

Fee-based digital transfers rivalling UPI may assure better security

- ANDY MUKHERJEE

Bank frauds in India have tripled in value. But that's only because some of the cases reported previously were re-investigated and appeared in the new data. More worrying than the surge in the amount, however, is the rise in the number of payment scams over the past couple of years. The solution lies in rewarding better security.

Most of the stealing from banks occurs the traditional way: via loans obtained with the help of forged documents or bribes. Customers, though, are increasingly at risk of being cheated when they make payments. According to the central bank's latest annual report, more than half of frauds took place in digital or card-based transactions, even though they accounted for only 1.4% of the $4 billion in scams.

And these are just the situations where the sums involved were ₹1 lakh ($1,160) or more. Thanks to a wildly popular smartphone-based payments network, much smaller values are being exchanged online for person-to-person and person-to-merchant transactions. The so-called Unified Payments Interface (UPI) is instantaneous, available 24/7 and mostly imposes no cost on users.

It's logging more than a million cases of hustle and con annually, according to separate government data. And this is just what's getting reported. Unless they are extremely careful, the more affluent depositors don't even come to know that they're being slowly bled.