In today’s world, consumers are spoilt for choice when it comes to payment methods.
With various platforms and new avenues of consumption available, the landscape of digital payments has evolved significantly. The expansion of digital payment options has undoubtedly made the entire process more efficient and seamless. A prime example of this growth is the Unified Payments Interface (UPI), which has surpassed a remarkable 10 billion monthly transactions.
At the same time, alternate forms of payment such as co-branded credit cards are emerging.
The Flip Side
The other aspect to stupendous growth of digital payments and cards is the corresponding growth in no. of online frauds. According to the Reserve Bank of India’s (RBI) annual report, both card and internet-based financial frauds in India are on the rise. The number of digital frauds increased from 2,545 in 2020-21 to 3,596 in 2021-22, and a remarkable 6,659 in 2022-23, marking an almost 200% increase since the onset of COVID-19. Correspondingly, the amount involved rose from INR 110 crore to INR 155 crore, and then to INR 276 crore. Interestingly, in 2011-12, the number of such cases was a mere one-tenth at 629.
The consequences of fraud are widespread, with the biggest risk being that the person making the payment has to expose their bank account details. The online gaming industry in India, which is growing rapidly, illustrates this risk. Many online gamers are teenagers, making them particularly vulnerable to online scams and fraud.
The Possible Solution
In this context, prepaid cards can emerge as a viable solution. A prepaid card allows users to preload a specific amount of money and use it for payments, providing convenience and security. The introduction of the National Common Mobility Card (NCMC) has further enhanced the benefits of prepaid cards. NCMC is an open-loop prepaid card on the RuPay platform, offering seamless metro and parking fare payments across the country. Additionally, it enables non-transit transactions like traditional and online shopping, travel, and more, while also earning rewards. Users of open-loop prepaid cards can also withdraw cash from ATMs.
An open-loop prepaid card offers numerous benefits. Unlike a debit card, it is not linked to a bank account, which means users do not need to expose their bank account details at the point of transaction, significantly mitigating the risk of fraud. Also, carrying a prepaid card is safer than carrying cash, as the potential loss is limited to the amount loaded on the card.
Prepaid cards often come with embedded security features such as PIN protection and two-factor authentication. Companies like AGS Transact Technologies Ltd have been pivotal in providing such secure payment solutions. Open-loop prepaid cards can be used across multiple sectors, including the gaming industry, where security is paramount.
Embracing Innovation to Mitigate Fraud
The payments landscape is in a state of transition, driven by rapid innovation. As this landscape evolves, it is crucial to remain alert about the growing risk of online fraud and actively adopt solutions like prepaid cards. Companies like AGS Transact Technologies Ltd are leading the way in providing robust and secure prepaid card solutions. These cards are effective tools for mitigating fraud risk, providing a safer and more secure way to navigate the digital payments ecosystem.
Conclusion
As digital payments continue to evolve, the importance of secure, innovative solutions like prepaid cards cannot be overstated. By adopting these measures, consumers and businesses alike can significantly reduce the risk of fraud and enhance the overall security of their financial transactions.
Note: The original article was first published on ETBFSI.