‘Digital payment frauds not alarming’

New Delhi: Digital payment fraud data revealed in Parliament this year is “not alarming” and should not be conflated with other types of banking fraud that do not affect the public, a person informed about the finance ministry’s record of such cases said on Monday, after an opposition party's social media post.

This person cited above said the number of digital payment-related frauds reported in the last 10 years and the amounts involved are not alarming and mixing it up with other types of banking frauds, where public is not the victim, will paint a wrong picture of the safety of the digital payment ecosystem. 

The total number of ‘digital payment frauds’ reported in India in the last ten years stands at 63,315 cases. This figure, reported by commercial banks and financial institutions under the specific category ‘card/internet and digital payments’, takes into account amounts involving at least ₹1 lakh, the person said quoting data tabled in Parliament on 10 March. 

Minister of state for finance Pankaj Chaudhary had on that day informed the Lok Sabha that these cases between FY14 and FY25 up to December involved a total loss to these entities of ₹733.26 crore, showed the written answer given to the House. 

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However, the opposition Congress party on Monday cited a larger figure in a social media post.

Conflating specific digital payment frauds with the much broader category of total banking frauds will create doubts about the banking system and amounts to creating a sense of alarm, the person said. 

The finance ministry, the RBI and the National Payments Corporation of India (NPCI) have rolled out several crucial measures to secure digital financial transactions and to combat fraud, the person said. 

The RBI issued norms on digital payment security controls in February 2021, mandating banks to implement common minimum standards of security controls for various payment channels like internet banking, mobile banking, and card payments, the person said. 

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To proactively identify illicit financial activities, the RBI has also launched an Artificial Intelligence-based tool named 'MuleHunter' for the identification of money mule accounts, the person said. A money mule account is one that is used to illicitly transfer or launder money.

A second person, who also spoke on condition of anonymity said that although current fraud rates remain low at roughly one per 114,000 transactions, there has been a rise in the volume and average size of cyber frauds. Hence, measures are being taken to increase public awareness to help prevent such crimes. 

Queries emailed to the finance ministry and to the Congress party on Monday late evening seeking comments for the story remained unanswered at the time of publishing. 

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