The demonetization of currency and the Indian government’s push for a cashless economy has given a big thrust to online and mobile transactions. While this may lead to the reduction of black money, it also introduces an immediate risk with the increase of online financial fraud. Demonetization creates an urgency to adopt new technology by those who rely on the demonetised currency for their primary income, exposing those affected in typically less tech savvy strata of the society who are vulnerable to online threats.
Last week I posted a picture on social media of 1,000 & 500 Rupees notes I have from my recent visit to Mumbai. Within minutes I had complete strangers recommending I download the PayTM and Freecharge digital wallets, and the Olacabs taxi app, apps I’d never heard off before. Coming from New Zealand, I am no stranger to paying electronically; New Zealand first introduced country-wide electronic funds transfer at point of sale (EFTPOS) in 1989. In 2016 Apple Pay & Android Pay both launched, offering NZ consumers the option to pay using their smartphone. We don’t expect to pay with cash, ever, even for temporary retail stores or paying back your friends for a shared meal, or kids pocket – it’s all transacted online.
Although there are distinct advantages provided by electronic payments for convenience and security, demonetization will also create a security and fraud issue which will leave many people at risk of fraudulent and criminal behaviour as they adopt new technology.
The increasing use of the Internet for electronic payments, online banking, online shopping increases vulnerability to scammers. Research commissioned for Connect Smart Week 2014 found that 83% of New Zealanders had experienced a cyber security breach. Even in a mature market like New Zealand, the latest full-year figures revealed by Internet watchdog NetSafe show more New Zealanders were falling victim to scams, losing a total of $13.4m NZD ($10M USD) in 2015 – more than double the 2014 loss. If you extrapolate this data, and that from multiple mature markets including the UK, Australia the US, when considering the current Internet population of India the potential financial loss could easily reach ₹500 Crores per year.
A report released by Symantec earlier this year supports this; India is a prime target for cyber attacks. Now with this sudden push for the cashless economy, we are bound to see an increase in such attacks according to Bypass’s Mumbai partner Harkaran Singh Sachdev. According to Symantec India is the second most favoured destination for ransomware in Asia with the average number of attacks per day increasing over 100% from 2015; every sixth social media scam occurring globally impacts an Indian Internet user. India is the third most targeted destination for financial Trojan infections globally.
Mr Sachdev, a former AVP at Reliance Jio believes that the Telecom Service Providers sector can play a role in addressing this issue. Operators can have systems and processes to identify infected IP addresses, cutoff compromised systems or control malware intrusions. “We may soon move from comparing services providers by speed and data quota, to how safe is my data network” he suggests. I agree because to capture your information the most sinister tactics used by cyber criminals include scanning open internet connections for home computers and mobile devices which have holes in their security. When cyber criminals find these vulnerabilities, they hack in, install software to load up malicious web pages which direct to phishing sites which replicate banking websites or the tax department promising a refund, all without the owner’s knowledge. Internet-delivered attacks are no longer a thing of the future. They’re an impactful reality which will harm millions of Indian citizens over the coming years with the uptake of new payment services.
Demonetization will reduce offline fraud and escalate the adoption of revolutionary new technology which makes our lives easier, but government & industry must act promptly to create initiatives which safeguard the hard-earned money of the common man who is vulnerable to this unintended consequence of demonetization.
Only the those with serious tech skills truly grasp the severity of the issue. The vulnerability is not simply about poverty, but it is the poor or the elderly who tend to suffer worst from cyber threats, leaving those most at risk of demonetization to bear the burden of this technical revolution to electronic payments. Socio-economic inequality will expose hardworking citizens who rely on the demonetized currency for day to day services like cleaning, delivery, and general errands. As the services workers switch to a smartphone or online payments method for payment, they will be most at risk from common vulnerabilities and exploits used by attackers.
The India telecommunications industry can reduce the harm by providing safe online experiences which minimise the impact of online fraud. Telecom companies have a tremendous opportunity to help consumers manage their risks and strengthen their resilience by ensuring malware and cyber attacks are reduced, while improving their customer’s online experience. It’s time to consider if your Internet provider offers a safe connection which protects you from the constant threat of online fraud & cyber criminal activity. Bypass is well positioned to help mobile operators face this threat to their customer base with a network-wide regulatory compliance platform which is quick to implement and cost-effective to scale.