Tier 1 cities concerned about digital payment fraud amidst Covid-19: Survey

Almost half of the Indian consumers (around 47 per cent) from the tier 1 cities are concerned about digital payments fraud now more than they were when the coronavirus first emerged, according to a new study conducted by YouGov and ACI Worldwide, a global provider of real-time electronic payment and banking solutions.

According to the survey, 28 per cent of respondents are exercising greater caution when using digital payment methods.

If impacted by fraud, 60 per cent of the respondents stated that they would first call their bank to block their account, indicating that during this time of heightened awareness, consumers consider their bank the first line of defense.

The survey revealed that 12 per cent would first report fraudulent activity to the police or a cybercrime unit, while a mere 4 per cent would turn to public social media channels first.

Surge in the digital payment system

Efforts by Indian authorities to encourage contactless digital payments over cash as a hygiene measure are resonating with consumers. Around one-third of consumers i.e. 32 per cent have increased their usage of digital payments (credit and debit card, mobile wallet, and other UPI-based payment methods) due to the push from NPCI, aimed at helping curb the spread of Covid-19. However, 1 in 10 respondents reported using cash more frequently now.

“The disruption caused by the Covid-19 pandemic provides another opportunity for fraudsters to dupe unsuspecting consumers,” said Kaushik Roy, vice president & country leader – South Asia, ACI Worldwide.

He further added, “It is encouraging that consumers are showing heightened awareness of digital payment fraud and a willingness to adapt behaviors. It appears that anti-fraud and security measures implemented by banks are also widely acknowledged and understood and that banks are still seen as the trusted source of support against fraud.”

The respondents expressed a high level of familiarity with assorted anti-fraud and security measures deployed by their bank or financial institution. 75 per cent recognize one-time password (OTP) as a key anti-fraud mechanism deployed by their bank. While 66 per cent utilize SMS/email notifications on their phone. And, around 55 per cent are aware of two-factor authentication as a security measure.

“Continued vigilance on the part of banks and their customers is paramount, as fraudsters are constantly evolving their methods — whether its harnessing new technology or adapting ‘social engineering’ tactics — to exploit the disruption,” continued Roy.

“Banks can help their customers through both active customer communication and education around fraud risks, as well as taking an enterprise-level, cross-channel approach to fraud prevention,” he added.

Payment behaviors and spending patterns

Digital payments have been adopted widely especially after the coronavirus lockdown, with 75 per cent of the respondents using a digital payment method at least once a week and 44 per cent using one almost daily. Only 3 per cent have never utilised a digital payment method. While only 7 per cent cited inconvenience (compared to cash) as a major concern when it comes to digital payments.

The survey disclosed that limited merchant acceptance was identified as a top concern by only 19 per cent (compared to 23 per cent in a similar survey conducted by ACI in October 2019).

Fraud and payments security

The survey conducted in tier I cities revealed that nearly 31 per cent have been a recent victim of a card or digital payment fraud or know someone among their immediate family or friends who has. 17 percent of those occurrences have been within the last month. Vulnerability to fraud remains the biggest consumer concern when it comes to digital transactions that stand at 54 per cent, followed by the risk of failed transactions that is 42 per cent.

When asked about digital payment fraud risks, fake apps and websites are the biggest, according to 52 per cent of respondents, followed by compromised password/credential information 43 per cent, and spyware/malware 39 per cent.

The sample size of the survey was 1,006 adults. The survey was carried out online. The figures have been weighted and are representative of all Indian adult respondents (aged 18+) in the following Tier 1 metro areas - Mumbai, Delhi NCR, Chennai, Kolkata, Bangalore, and Hyderabad.