Payment frauds are rising sharply if the data from the Reserve Bank of India is any indication. Domestic payment frauds jumped by 70.64 per cent to Rs 2,604 crore during the six-month period ended March 2024 from Rs 1,526 crore in the same period of last year. The volume of frauds also rose to 15.51 lakh during the March 2024 period from 11.5 lakh in the previous six-month period, RBI data shows. While the RBI has considered only domestic financial transactions, the new format captures e-commerce transactions - transactions using FASTags, digital bill payments and card-to-card transfer through ATMs, etc. However, failed transactions, chargebacks, reversals, expired cards/ wallets, are excluded. Data on domestic payment fraud statistics is as reported by scheduled commercial banks (excluding RRBs), non-bank PPI issuers and non-bank credit card issuers in CPFIR (Central Payments Fraud Information Registry), it said. There were 2.57 lakh payment frauds involving Rs 471 crore in March alone and 2.53 lakh frauds for Rs 503 crore in February. Frauds lead to reputational, operational and business risk for banks and undermine customers’ trust in the banking system with financial stability implications. Despite tough regulations and improved technology, scamsters were finding new routes to game the system. A recent RBI report said new technologies enhance the efficiency and effectiveness of banking operations. “With this, however, the risks of fraud and data breaches have also increased. Concerted efforts by all stakeholders including regulators, banks and customers are required to protect the system from these threats. On its part, the Reserve Bank has been striving to update the regulations to protect customers while ensuring that innovations are not stifled,” it said. On December 27, 2023, the RBI said banks have witnessed a sudden spurt in frauds in the credit & debit cards and internet segment. The average amount of involved in frauds declined by 85 per cent during the April-September of 2023-24 with the number of frauds rising sharply by 624 per cent in the card and internet segment based on the date of reporting, it said. The number of frauds in the card and internet jumped to 12,069 cases involving Rs 630 crore during April-September of 2023-24 as against 2,321 cases for just Rs 87 crore in the same period of last year, according to the RBI. Overall, banks reported 14,483 fraud cases involving Rs 2,642 crore during April-September of 2023-24 as against 5,396 cases involving Rs 17,685 crore frauds in the same period a year ago. According to RBI data, banks and NBFCs added 1.65 crore credit card users during FY24, taking the total number of card users to 10.18 crore. The value of credit card transactions was at a record level of Rs 164,223 crore during the month of March 2024 as against Rs 149,206 crore in February. Of this, point-of-sale transactions were Rs 60,378 crore in March 2024. “With credit card usage rising sharply, banks were in a hot race to add new users. “They were offering attractive reward points, EMI facility and even offer personal loans on the basis of their credit cards. Card users are offered personal loans based on their credit rating score,” said an official of a nationalised bank.
