Prime Minister Narendra Modi wants Indians to stop using cash for daily transactions and rely on mobile wallets, debit and credit cards and Aadhaar-based payments instead.
But how safe are cashless payments? What really are the threats that your hard-earned money can be subject to, if you transact digitally? Here’s all that you wanted to know.
Your data can be stolen: The entire online payment ecosystem relies on data, as bit and bytes replace hard physical currency. In October, just weeks before demonetisation, as many as 3.2 million debit cards were compromised in what was perhaps India’s biggest such security breach. Moreover, your debit or credit card can simply be cloned. A cashless society will require a robust and secure backend IT infrastructure, and the government will need to fill gaps here.
You may simply lose your mobile phone: If your mobile phone becomes your wallet, you may be left high and dry if you lose that or are pickpocketed. Mobile wallets effectively store money and anyone in possession of your mobile phone could use it to make purchases or transfer the money, especially if your phone is not password protected. It is for this reason that phone-based biometric authentication needs to become the norm for fool-proof security.
A cheque can bounce: Cases of bouncing cheques have been such a big problem in India that they have been clogging up the entire legal system. A cheque can bounce either for lack of funds or any other reason, and can lead to a disruption in payments. In January this year, the government notified the new Negotiable Instruments (Amendment) Bill 2015, which allowed for a cheque bouncing case to be filed in a court at the place where it was presented for clearance, instead of the place of issue. Having said that, it can take a long time to get someone to pay up, hampering business activity.
Few laws protect online transactions: As VCCircle noted last week, India has simply not enacted any laws to come to consumers’ aid if they were to lose money as a result of online fraud. Although India does have a functioning Information Technology Act, there are no specific laws that deal with digital payments conducted via mobile wallets and other such devices. Moreover, companies that promote such wallets are classified as non-banking financial companies, which technically brings them under the ambit of the Reserve Bank of India. The government will, therefore, have to streamline regulations so as to guarantee an effective legal cover for such transactions.
Hack attacks, especially over open wireless networks: Although India has already leapfrogged ahead into the wireless era, airwaves remain vulnerable and can be hacked. Moreover, few people take care to password protect their home WiFi connections, giving potential hackers a chance to seize sensitive information.
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