People and organizations alike were using digital apps to manage their finances and conduct transactions even before the viral outbreak. However, following the pandemic, the rate of digital adoption witnessed a tremendous rise. According to the National Payments Corporation of India (NPCI), UPI transactions nearly doubled between April and September 2020, hitting a volume of over 180 crore.
On the flipside, the rise in digital payments has been accompanied by an exponential spike in digital payments frauds.
Even if you didn’t fall prey to any instance of fraud, chances are you must have heard it mentioned among your friends, family, or on social media. ‘Request Money’ scam emerged as one of the most common deception stories finding a mention in conversations last year. As part of this scam, miscreants sent a request to pay money to the receiver who was supposed to receive money. Many an unsuspecting user, in moments of inattention, was defrauded into entering their UPI M-PIN, thereby validating a fraudulent transaction. This was, by no means, the only method that malicious actors deployed to dupe unassuming Indians.
The pandemic saw a surge in the number of fraudulent phone calls and SMS, unauthorized SIM cloning activities, vishing attacks, cashback/refund scams, etc.
Against the backdrop of an increasingly digital-first economy, it has become critical for public and private players to come together to come up with the necessary solutions to ensure that users are protected in an equally increasingly sophisticated threat landscape. Beyond policy-level measures, it is a smart combination of advanced technologies that can secure the digital payments ecosystem against existing as well as emerging threats.
Why a smart combination of technologies holds the key?
User-friendliness is a key requirement everywhere to encourage the adoption of new digital-based solutions. In a country like India where a majority of people do not typically identify themselves as tech-savvy, fintech companies need to tread a finer line than most. The security protocol needs to be strong enough to fend off malicious actors and easy enough to navigate that it doesn’t become an obstacle to the adoption of the solution among the masses.
Against this backdrop, the two-step authentication protocol has emerged as the most popular security system deployed in digital payments apps. This has, however, not prevented fraud from taking place.
In addition, the two-step authentication process can itself become a cause of inconvenience if you’re in a place where digital or internet penetration level is far from optimal. This is the case in many remote and rural regions in India where people either do not have access to smart digital devices or robust internet connectivity, sometimes both. In keeping with this context, fintech services providers are tasked with a twofold challenge: driving financial inclusion across regions disconnected from the digital heartland while ensuring that such users are protected against sophisticated threat campaigns.
Fortunately, some new-age players believe that a combination of blockchain – widely considered as the most invulnerable technology to date – and soundwave technologies holds the key to solving the problem at hand.
Unlocking secure digital payments through a combination of blockchain and soundwave tech.
Most people have heard about blockchain in association with cryptocurrencies like bitcoin. Blockchain technology is believed to be one of the most secure information storage systems currently in existence. The system comprises a publicly distributed ledger that keeps a record of every transaction in millions of separate blocks called ‘nodes’. Therefore, even if one node comes under attack, the information contained in other nodes will stay secure.
To hack into a blockchain-protected system, the threat actors would need to leverage enormous computing power to compromise millions of nodes at the same time. Precisely because of this, blockchain emerges as an ideal solution to store, safely and securely, all the transaction-related information.
Soundwave steps into the picture as the perfect complementary technology to facilitate the transfer of relevant quantum of information to and from the user’s mobile phone. The biggest benefit of using soundwave-based technology is that it is hardware-independent.
In other words, users do not need smart devices or internet connectivity to carry out digital payments based on this technology because it can enable seamless contactless payments through sounds. Users only need to be within hearing distance of the merchant’s emitter and/or receiver to carry out a transaction.
Blockchain and soundwave technology comprise the optimal combination for enabling contactless payments – securely and seamlessly. In a country such as India which was home to more than 400 million feature phone users as recently as 2018, this combination holds the key to unlocking greater financial inclusion, in line with the PM’s vision of making the country a truly cashless economy.
Views expressed above are the author’s own.
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