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 the October-March period of 2024, compared to Rs 1,526 crore in the corresponding period last year. The number of fraudulent transactions also spiked from 11.5 lakh to 15.51 lakh during the March 2024 period, according to data released by the Reserve Bank of India (RBI).

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

In March alone, there 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 the RBI highlights the dual nature of new technologies, which enhance banking operations' efficiency but also elevate the risks of fraud and data breaches. The RBI emphasises the need for collaborative efforts amongst regulators, banks, and customers to safeguard the system from these threats, while ensuring that innovations are not stifled.

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

Growing cardholder base

Furthermore, during FY24, banks and non-banking financial companies (NBFCs) added 1.65 crore credit card users, bringing the total number of card users to 10.18 crore. The 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.