Domestic payment frauds skyrocket 71% to Rs 2,604 crore in October-March period

Payment fraud surges: Fraudulent activities in payment systems have surged dramatically. Domestic payment frauds skyrocketed by 70.64 per cent, totalling Rs 2,604 crore in October-March period of 2024, compared to Rs 1,526 crore in corresponding period last year. number of fraudulent transactions also spiked from 11.5 lakh to 15.51 lakh during March 2024 period, according to data released by Reserve Bank of India (RBI).

RBI's data now encompasses a broer spectrum, including e-commerce transactions, FASTag usage, digital bill payments, and card-to-card transfers via ATMs, amongst ors. However, it excludes failed transactions, chargebacks, reversals, and expired cards/wallets. reported statistics are sourced from scheduled commercial banks, non-bank payment instrument issuers, and non-bank credit card issuers through Central Payments Fraud Information Registry (CPFIR).

In March alone, re were 2.57 lakh payment frauds amounting to Rs 471 crore, while February witnessed 2.53 lakh frauds totalling Rs 503 crore.

Tech risks & collaboration

A recent report by RBI highlights dual nature of new technologies, which enhance banking operations' efficiency but also elevate risks of fraud and data breaches. RBI emphasises need for collaborative efforts amongst regulators, banks, and customers to safeguard system from se threats, while ensuring that innovations are not stifled.

In December 2023, RBI highlighted a notable increase in fraud related to credit and debit card and internet transactions. Although average fraudulent amount decreased by 85 per cent during April-September 2023-24, number of frauds surged by 624 per cent in card and internet segment compared to previous year.

Overall, banks reported 14,483 fraud cases amounting to Rs 2,642 crore during April-September 2023-24, compared to 5,396 cases totalling Rs 17,685 crore in same period previous year.

Growing cardholder base

Furrmore, during FY24, banks and non-banking financial companies (NBFCs) ded 1.65 crore credit card users, bringing total number of card users to 10.18 crore. value of credit card transactions reached a record high of Rs 164,223 crore in March 2024, with point-of-sale transactions amounting to Rs 60,378 crore.

As credit card usage continues to surge, banks are fiercely competing to attract new users by offering enticing rewards, EMI facilities, and even personal loans based on credit card usage and credit rating scores.