According to a new report from the Reserve Bank of India (RBI), digital payments fraud in the country grew 14.57 billion rupees ($175 million) in the year ended March 2024 from a year ago.
The rise in fraud comes as India increasingly embraces digital payments following the 2016 launch of its United Payments Interface (UPI), Bloomberg reported Thursday (May 30), which allows users to transfer money instantly using their phones.
The value of transactions on UPI climbed 137% in the past two years to 200 trillion rupees, RBI said, per the Bloomberg report. Additionally, more financial inclusion and improved internet access contributed to an increase in digital payments across the country.
The widespread embrace of digital payments paints a bigger target for fraudsters, Nikhil Jois, head of growth at fraud detection platform Bureau, told Bloomberg.
“Coupled with a lack of financial literacy and imprudent use of technology, vast population is rendered vulnerable to such attacks,” he said, according to the report. “Fraudsters are getting sophisticated by the day, while financial institutions and FinTechs, jostling for market share and growth, have loosened controls.”
Digital payments, including cards and internet transactions, comprised 10.4% of the total fraud amount, up from 1.1% in fiscal 2023, Bloomberg said.
Despite the risk inherent with faster payments, consumers and businesses alike are increasingly demanding this service.
That’s according to two reports by Federal Reserve Financial Services, which noted that last year saw a 31% increase in digital wallet use by businesses, and a roughly commensurate 32% increase in consumer usage, PYMNTS reported earlier this month.
“These changes, particularly consumers’ use of digital wallets and online banking, are leading to increases in instant and faster payment use cases such as bill payment, mobile wallet funding and defunding, account-to-account transfers, and immediate payroll for employees,” the Federal Reserve said.
Additionally, the Fed’s Consumer Research Brief found that 57% of consumers plan on using faster payment options more broadly in the future. Among the most popular use cases for instant payments are online shopping and bill payments, according to the Fed.
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