“The industry under Payments Council of India is coming together for data sharing and we are creating a negative database for both merchants and customers to tackle errant participants in the segment,” an official in the know said.
With the rise in cyber frauds over the last 18 months, payment operators are coming together to share intel on fraudsters, in an effort to blacklist them. The operators are planning to set up a countrywide negative database that can be used across payments platforms and will serve as a repository of all fraudsters, types of frauds and fraud heat map across India.
“The industry under Payments Council of India is coming together for data sharing and we are creating a negative database for both merchants and customers to tackle errant participants in the segment,” an official in the know said. “This is quite the need of the hour as the negative database created by card network operators doesn’t necessarily work on cash on delivery or UPI payments.”
As per the latest RBI annual report, for the fiscal year gone by banks reported 2545 cases of frauds amounting to Rs 119 crore(US$15.95million) done through online channels and card networks. This was 35 per cent of the total frauds perpetrated last year in number terms. The quantum would have been much higher if we consider such frauds perpetrated through other online channels and UPI platforms.
“We are also creating a common platform to share intel of different kinds of frauds being perpetrated, every member will have to share their negative database to get access to such a list prepared on an industry wide scale,” said another official in the know. “There are also plans to issue authenticity certificates to merchants to weed out the fraudsters.”
Interestingly, the Ministry of Home Affairs has set up a cybercrime portal for reporting of online financial frauds across sectors in 2020. The provisions laid under the MHA portal allows different entities across sectors such as banking, digital payments, and telecom.
This was after several fintech companies made representations to the government and RBI that lack of data sharing between stakeholders on potential red flags in real time could help significantly stem frauds in the consumer economy. According to a source, the payments industry’s cyber fraud ‘task force’ will attempt to complement existing provisions made by the government and regulator in mitigating digital frauds.
“The attempt is to create a task force between payment companies that can streamline decision making and standardise reporting strictures. This taskforce can also liaison between banks and telcos for speedy blacklisting of fraudsters,” said a person aware of the matter. This is expected to be a part of Payment Council of India’s proposed Self-Regulatory Organisation (SRO) in the works for the fintech industry.
In its Financial Stability Report launched earlier this month, the RBI said it is working “more intensively” with supervised entities to strengthen their cyber security resilience as well as mitigate these risks.
For the financial ecosystem 2021 has seen risks emanating from cybersecurity lapses “increase considerably,” the central bank said in its FSR.
“The year 2021 has so far seen attempts to target the payment ecosystem of the country by adopting multiple modus operandi, including the theft of payment card credentials and compromise of ATM infrastructure,” RBI said. In response, the Reserve Bank has issued advisories/alerts to mitigate their impact and is also working more intensively with supervised entities to strengthen their cyber security resilience.”