Industries, governments and consumers alike need to play their part in protecting digital payments from fraudsters and hackers. How?
Two years since the surge in adoption of digital payments, shoppers have transitioned to day-to-day use of the technology, with online payments becoming second nature for those buying goods and services online.
However, like anything that soars in popularity, digital payments have become a target for scammers. These bad actors know that newcomers to the technology lack cyber awareness and experience with data privacy or security, and prey on them to steal personal security details and monies.
However, contrary to popular belief, the younger, digital-native generation in technologically well-developed cities have also been some of the biggest victims in the recent times.
So, how can the e-commerce and digital payments industry, as well as the banks, work together to shoulder the risks?
- Building defenses from the ground up
While banks and financial institutions have a responsibility to protect their customers’ data and financial information, passively protecting systems and databases from potential cybercrime is no longer sufficient.
With such high rates of adoption by people from all walks of life, and with differing levels of financial literacy amongst the digital payments user base, more needs to be done to combat this wave of crime.
However, a delicate balance needs to be struck between educating users on the dangers of misuse of digital payments, and further encouraging them to continue adopting and using digital payment modes with confidence. Put simply, a prolonged loss of consumer trust in digital payments, and an inability to fight back against scammers, would cost banks, e-commerce platforms and payment service providers dearly.
Taking steps to bolster the security for users of digital payments, some payment players have taken adopted AI and ML to identify scams early and stop them before they come to pass.
Technology like this can play a crucial role in surveillance and also in ensuring the compliance of digital players, helping to give end users the peace of mind needed when paying for anything digitally.
- Consumers must do their part
While financial regulators in South-east Asian countries such as Singapore have declared that consumers will not be held fully liable for financial losses of fraudulent acts, one can argue that the consumer should still be responsible for having willingly, although unknowingly, given scammers access to their bank details.
In an increasingly interconnected financial ecosystem, consumers cannot passively depend on third parties to protect them, no matter how robust the security infrastructure of their payment provider may be.
Therefore, the onus is also on consumers to always practice vigilance, more so for the digital native generation. Unlike the older generations that may not be comfortable with digital financial services and thus possibly more cautious, the younger generations could be too overconfident of such technologies and thus fall victim as a result of their complacency. For this audience, banks, e-commerce platforms and payment players can offer financial education at an early age, continually reinforcing cyber awareness in pace with ever-developing scams.
- Plugging the digital literacy gap
Due to the rushed digitalization worldwide due to the pandemic, a gap between digital consumption and digital literacy now needs to be bridged.
To plug the gap, some banks have taken the responsibility to educate their customers and upskill them on financial and digital literacy by launching education and awareness campaigns targeted at those who are at risk.
At the governmental level, steps have also been taken to detect and disrupt scams, as well as mitigate losses and to strengthen public education levels.
But there is always more to be done, and now is the time for education systems to play a bigger role in preparing young generations to be not just digitally literate but also cyber literate.
As the world continues to digitalize, scams will grow increasingly complex and sophisticated. Now more than ever, the entire ecosystem needs to come together to fight against digital threats.