Debit Card Fraud: How Safe Are Mobile Banking And Digital Wallets?

Are mobile banking and digital wallets susceptible to breaches too?

Image used for representational purposes. (Photo: iStock Photos)

In the last four years, the value of mobile banking transactions has increased 222 times to Rs 4.04 lakh crore in 2015-16, according to data available with the Reserve Bank of India (RBI).

The RBI data also shows that the number of transactions through Prepaid Payment Instruments (PPIs) such as, Paytm, FreeCharge and MobiKwik has risen to 74.8 crore in 2015-16, as compared to 29.8 crore transactions the previous year.

Banking apps and mobile wallets are changing the way Indians pay. The recent incident of debit card breach has raised serious apprehensions about the usage of physical cards in India and raised alarm bells for customers and banks. This large-scale breach also raises the question – how secure is mobile banking, or digital wallets for that matter? Are they susceptible to breaches too?

With apps like Paytm, MobiKwik and FreeCharge, the user base for digital wallets is expanding. Banks are catching up as well – there are now more than 20 different apps launched by banks for their own customers as well as those of other banks.

Cyber security experts say that so far, India has enjoyed the privilege of not being the focus area for hackers, but that’s slowly beginning to change.

(Photo Courtesy: BloombergQuint)

With a booming economy and online migration of banks, there has been an increase in hacking activities, Saket Modi, co-founder of cyber security firm Lucideus Tech said in a telephonic conversation.

Over the last six months, some of the biggest hacks have happened in Bangladesh and Nepal. It is about time that we have a clear focus when it comes to cyber security.

Saket Modi, Co-founder, Lucideus Tech

FreeCharge says that their system is robust as it is designed with multiple layers of security, many working independently of others, to ensure security.

The measures in place are regularly evaluated to update against any new areas of concern.

FreeCharge spokesperson said in an email

(Photo Courtesy: BloombergQuint)

Mobile Banking Vs Internet Banking Vs Digital Wallets

Analysts and cyber security experts say that mobile banking has evolved into a much safer alternative compared to outdated and less secure payment tools such as debit cards or internet banking.

“One can now securely send money, pay at merchant locations, withdraw cash using mobile banking apps without the need for debit cards. Technologies such as Unified Payment Interface (UPI) and Near Field Communications (NFC) have made this possible,” said Amit Jaju, executive director of fraud investigation and dispute services at consultancy firm EY, while explaining the features that make mobile banking apps less prone to hacking.

What makes mobile phones secure over computers is that no arbitrary software can be installed easily on them. Additional protection like biometric makes the app even more secure. Even for phishing the preferred channel for hackers is internet banking, said Jaju.

Read the full story on BloombergQuint.