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DIGITAL CASH TRANSFERS

a new way to

DIGITAL FRAUD

PERSONAL FINANCE PLANNIG

ASSIGNMENT

Introduction:
Digital money (or digital currency) refers to any means of payment that exists in a
purely electronic form. Digital money is not physically tangible like a dollar bill or a coin.
It is accounted for and transferred using computers.

This means that both parties, the payer and the payee, use electronic
mediums to exchange money.

Financial services companies facilitate digital money transfers and foster online
transactions between complete strangers across long distances. Without digital money,
many online retail websites would operate far less efficiently. Digital money also makes
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it possible to bank online or via smartphone, eliminating the need to use cash or to visit
a bank in person.

The Indian government has been promoting and propagating online payments
aggressively, starting with demonetization back in 2016. ‘Digital India’ had been the
guiding force of many economic and financial decisions that pushed Indians to switch to
online payments. The world has been moving towards all things digital for some time
now. However, the year 2020 put into perspective the dire need to adapt to digital
technology as soon as possible. This adaptation happened almost instantly with the
lockdown coming into effect, especially for digital payments in India.

After the launch of Cashless India, we currently have ten methods of digital payment
available in India. Some methods have been in use for more than a decade, some have
become recently popular, and others are relatively new.
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❖ Banking Cards
Indians widely use Banking cards, or debit/credit cards, or prepaid cards, as an alternative to
cash payments. Andhra Bank launched the first credit card in India in 1981. Cards are preferred
because of multiple reasons, including, but not limited to, convenience, portability, safety, and
security. This is the only mode of digital payment that is popular in online transactions and
physical transactions alike.

❖ Unstructured Supplementary Service Data(USSD)

USSD was launched for those sections of India’s population which don’t have access to proper
banking and internet facilities. Under USSD, mobile banking transactions are possible without
an internet connection by simply dialing *99# on any essential feature phone.

❖ Aadhaar Enabled Payment System (AEPS)

AEPS is a bank-led model for digital payments that was initiated to leverage the presence and reach
of Aadhar. Under this system, customers can use their Aadhaar-linked accounts to transfer money
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between two Aadhaar linked Bank Accounts. As of February 2020, AEPS had crossed more than 205
million as per NPCI data.

❖ Unified Payments Interface (UPI)

UPI is a payment system that culminates numerous bank accounts into a single application,
allowing the transfer of money easily between any two parties. As compared to NEFT, RTGS, and
IMPS, UPI is far more well-defined and standardized across banks. You can use UPI to initiate a
bank transfer from anywhere in just a few clicks.

❖ Mobile Wallets
Mobile Wallets, as the name suggests, is a type of wallet in which you can carry cash but in a
digital format. Often customers link their bank accounts or banking cards to the wallet to
facilitate secure digital transactions. Another way to use wallets is to add money to the Mobile
Wallet and use the said balance to transfer money.

❖ Bank Prepaid Cards

A bank prepaid card is a pre-loaded debit card issued by a bank, usually single-use or reloadable
for multiple uses. It is different from a standard debit card because the latter is always linked
with your bank account and can be used numerous times. This may or may not apply to a
prepaid bank card.

❖ PoS Terminals
PoS(Point of Sale) is known as the location or segment where a sale happens. For a long time,
PoS terminals were considered to be the checkout counters in malls and stores where the
payment was made. The most common type of PoS machine is for Debit and Credit cards, where
customers can make payment by simply swiping the card and entering the PIN.

❖ Internet Banking
Internet Banking, also known as e-banking or online banking, allows the customers of a
particular bank to make transactions and conduct other financial activities via the bank’s
website. E-banking requires a steady internet connection to make or receive payments and
access a bank’s website, which is called Internet Banking.
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❖ Mobile Banking
Mobile banking refers to the act of conducting transactions and other banking activities via
mobile devices, typically through the bank’s mobile app. Today, most banks have their mobile
banking apps that can be used on handheld devices like mobile phones and tablets and
sometimes on computers.

FRADULENT SCHEMES:
Today, even after technology has grown to a great level, people find it unsafe to use payment
gateways and try to avoid buying online or transfer money online to someone. No doubt there
is a risk when you are using the internet, though if you take care of a few things and take
proper precautions, you can consider online payments as one of the best ways to either buy
things or transfer money to someone.

When it comes to the potential fraud risks while transacting through UPI or eWallets, almost
half of the consumers are most concerned about fake UPI payment links that ask for money
transfers through text or e-mail.

Some of the fraudulent activities are mentioned below:

♦ Phishing

Phishing is a type of social engineering where an attacker sends a fraudulent ("spoofed")

message designed to trick a human victim into revealing sensitive information to the attacker
or to deploy malicious software on the victim's infrastructure like ransomware. Phishing
attacks have become increasingly sophisticated and often transparently mirror the site being
targeted, allowing the attacker to observe everything while the victim is navigating the site,
and transverse any additional security boundaries with the victim.[1] As of 2020, phishing is
by far the most common attack performed by cyber-criminals, with the FBI'
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s Internet Crime Complaint Centre recording over twice as many incidents of phishing than
any other type of computer crime.

♦ Credit Card Cloning

Credit card cloning refers to making an unauthorized copy of a credit card. This practice is
also sometimes called skimming. Thieves copy information at a credit card terminal using an
electronic device and transfer the data from the stolen card to a new card or rewrite an
existing card with the information. Unfortunately, cloning and related forms of theft have
become increasingly widespread in recent decades. Thankfully, security improvements—such
as the use of personal identification numbers (PINs) and chip cards—have helped to protect
against these types of attacks.

♦ Skimming

Skimming is an act of stealing information through the magnetic strip on the cards that are
used in ATMs and merchant establishments. Fraudsters collect information from a
credit/debit/ATM card by reading the magnetic strip on the reverse of the card. This 'skimmer'
scans the card details and stores its information. Skimming is an illegal practice used by
identity thieves to capture credit card information from a cardholder surreptitiously.
Fraudsters often use a device called a skimmer that can be installed at gas pumps or ATM
machines to collect card data.

♦ Ponzi scheme
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A Ponzi scheme is an investment fraud that pays existing investors with funds collected from
new investors. Ponzi scheme organizers often promise to invest your money and generate
high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the
money. Instead, they use it to pay those who invested earlier and may keep some for
themselves.

Many Ponzi schemes share common characteristics. Look for these warning signs:
▪ High returns with little or no risk.
Every investment carries some degree of risk, and investments yielding higher returns
typically involve more risk. Be highly suspicious of any “guaranteed” investment
opportunity.

▪ Overly consistent returns

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Investments tend to go up and down over time. Be skeptical about an investment that
regularly generates positive returns regardless of overall market conditions.

▪ Unregistered investments
Ponzi schemes typically involve investments that are not registered with the SEC or with
state regulators. Registration is important because it provides investors with access to
information about the company’s management, products, services, and finances.

On a positive note, the efforts of the government to encourage digital payments have been
lauded, with nearly 8 in 10 (78 per cent) consumers agreeing that the government should
continue to promote them to maintain safety and social distancing measures during the
pandemic.

Safety and Precautions against such fraudulent

activities:
In order to be safe, and protect your data, there a few things that you can consider during the
process of online payments. By understanding and implementing these steps, you can surely
feel safer and secured while making online payments to someone. A few precautionary
measures to be taken are as follows:

⮚ Never save your card details

There are options to save your card for future payment and to save your time when you buy
the next time, but never do this. Never save your card information whatsoever the reason
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maybe. It is completely okay to enter your card details again, but it is never recommended to
save your card details.

⮚ Do not share your OTP

OTP is the one time password that you get on your device for the payment verification. Post
submission of the OTP and its verification, the payment is successful. Never share this data
with anyone. This is a piece of sensitive information and you should avoid sharing it with
anyone whatsoever the reason maybe.

⮚ Avoid accessing payment through different computers

Always use your own system, laptop, desktop, or mobile device to make any purchase or use
your banking system. Avoid any different systems for such kind of work.

⮚ Have complex passwords

I know this is difficult to remember, though it is important to be safe online. Have strong
passwords and try to keep on updating your passwords every week or every month. Never
have your name, date of birth, mobile number, or anything in your password that is directly
linked to you. Complex and strong passwords are recommended.

⮚ Never save passwords

Your browser keeps on asking you to save a password. This helps in remembering your
passwords easily, but avoid saving them. If in case your browser is attacked by malware or
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data is lost, your data can be compromised and passwords can be stolen. So it’s better not to
save any passwords in your browser.

⮚ Enable two-factor authentication.

Two Factor Authentication gives a more sophisticated level of protection by means of

security questions, SMS messages, OTPs, push notifications, etc.

Sources: www.economictimes.com
www.cybercelldelhi.in
www.investopedia.com