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Building Secure Future For Digital Payments In India

Digital financial payments also facilitate record-keeping and improve the transparency of financial transfers by creating an easily traceable electronic trail that can reduce financial leakages. The electronic trail also improves and hastens dispute resolution

In India, the digital payments space has undergone significant growth in recent years. With a total value of $300 million digital payments in India in 2021, the value will grow three-fold to touch $1 trillion, by 2026. Right from new businesses entering the payments ecosystem, technological advancements, and customer convenience initiatives, up to forward-thinking regulatory measures, everything contributed to the phenomenal rise of digital payments.

It is safe to say that digital payments will be embraced on a wider scale in the coming years, and that brings us to a few underlying questions: Why should digital payment adoption increase? What is the importance of security in digital transactions? What is the way forward to ensure increased adoption? Let us find answers to them through this article.

Reasons Why Digital Payment Adoption Must Surge

Digital payments offer increased convenience as they are much faster than the traditional methods of payment such as cash or cheques. People do not have any constraint of time or location in the case of online payments. They can easily make payments from anywhere in the world at any time, which often leads to better experiences.

Digital financial payments also facilitate record-keeping and improve the transparency of financial transfers by creating an easily traceable electronic trail that can reduce financial leakages. The electronic trail also improves and hastens dispute resolution

Other initiatives such as the Account Aggregator platform enables broader inclusivity of all segments of India. It enables everyone to have access to finances irrespective of where they are or in what segment they are.

Digital payment adoption should certainly increase in the country as using the electronic payment system has several added advantages that range from faster payments, transparency, increased security, broader inclusivity, to better customer convenience.

The Significance Of Security

As a result of the rapid adoption of digital payments in India and the introduction of new payment channels, risk management has become a key concern. Any security breach on a digital payment platform is likely to undermine the customers’ trust and may make them apprehensive of payment system security. Therefore, everyone in the digital payments ecosystem will need to put payments security and risk management at the top of their list of priorities.

Steps being taken to enhance security measures in the digital payments space

1. Banks, other financial institutions, as well as NBFCs, are all introducing near real-time data analytics and machine learning to help manage risks in payment systems.

2. For financial transactions, fintech and technology businesses are creating solutions based on adaptive and step-up authentication (an additional form of authentication).

3. Customers have been informed by banks and financial organizations about multiple risks in the system along with basic steps to mitigate them.

4. In order to lessen the risk of repudiation, banks are also encouraging customers to use digital signatures whenever making high-value inter-bank transactions through net banking.

5. The traceability of transactions in blockchain minimizes the transacting parties' risk of repudiation, making it one of the most compelling reasons for financial institutions to invest in this technology further.

6. A robust and fast dispute resolution system is setup by financial institutions which can serve as the last resort of defence to ensure that fraudulent transactions are reversed

The Way Forward

The adoption of digital payments is going to continue to rise exponentially. The increasing use of new payment instruments will continue to raise security concerns for businesses.

Stakeholders must invest in newer, safer tools and technology in order to protect the customer and sustain their trust in the payment ecosystem. Education of partners in order to establish a mature risk management framework that addresses the risks associated with all new-generation payment solutions is also crucial. Thus, it is vital to regularly assess risks and create a safe, secure, and future-ready environment.

(The given article is attributed to Ramkumar Venkatesan, SVP - Engineering, Cashfree Payments  and has been exclusively created for BW Disrupt)


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digital payments Ramkumar Venkatesan Cashfree Payments

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