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Banking digital payments

The ultimate winner in the UPI vs Digital Cards battle

UPI and Digital Cards have taken the payments ecosystem to the next level

 

Between October 2018 and January 2019, 67 million debit cards went off the circulation in the economy market. Also, as per statistics, around 6 lakh crore was spent using credit cards, an increase of 30%. On the other hand, UPI clocked a whopping 1.31 billion transactions in December 2019. This has opened up a debate on UPI vs Digital Cards.

UPI, introduced in 2016 is an instant digital payments ecosystem. The ease of transactions coupled with security features like QR and signed intent, Invoice, etc makes it more attractive vis a vis credit and debit cards.

UPI vs Digital Cards

In the course of this blog, let us discuss the distinguishing features of UPI vs Digital Cards debate.

UPI vs Digital Cards Feature 1: Ease of transactions

UPI has an edge over credit/debit cards when it comes to ease of transactions. In case of a credit or a debit card, card details like card number, CVV, card expiry date, etc is entered before making a transaction. The enormous details make the transaction lengthy and cumbersome.

Contrarily, UPI transactions take place upon entering the single information, VPA (Virtual Payment Address) of the payee. Hence, UPI transactions happen in a hassle-free and simple manner. There is no complexity like entering the card details.

UPI vs Digital Cards Feature 2: Cash withdrawal feature

Debit cards have an upper hand when it comes to withdrawing money from an Automated Teller Machine (ATM). Money withdrawal is available 24*7 from any corner of the country. Hence, this feature acts as an emergency cushion for people in the need of money.

Comparatively, UPI does not come with a cash withdrawal feature. Money transfer happens from bank to bank in an online fashion.  

UPI vs Digital Cards Feature 3: Level of compliance

Digital cards come with a high level of compliance formalities. For example, to avail a credit card, one needs to have a good credit score. Your credit score helps the banking authorities and companies in processing your credit card request.

On the other hand, UPI does not come with complex compliance formalities. Irrespective of your credit score, you can use UPI to make transactions with KYC verification and your mobile number registration.

UPI vs Digital Cards Feature 4: Refund feature

There are 3 parties in a credit card payment system. Customer, merchant and the intermediary bank ( customer’s bank ). In the case of refunds to the customer, the merchant has to directly deal with the customer’s bank.

While in the case of UPI transactions, merchant and buyer has direct contact. There is no role of an intermediary bank in facilitating the transactions. Hence, there is a reduction in the refund settlement time.

UPI vs Digital Cards Feature 5: Authorising requisite payment

In a credit card transaction system, the overdue amount is auto-debited from a customer’s bank account. Herein, a customer does not have control in authorizing the payment.

Contrarily, in a UPI transaction system, the customer is in full control of the money transfer. He/she can authorize send or receive money requests. Hence, the customer is in full control of the money transactions in the case of UPI.

UPI vs Digital Cards Feature 6: Support from banks

In the case of UPI transactions, banks have access to UPI, even if they don’t allow recurring payments on their systems. As a consequence, there is flexibility and ease of funds transfer.

In comparison, digital cards do not have access to recurring payments if the feature is not active at the bank’s end.

 

 

References:

  1. https://yourstory.com/2019/03/debit-card-numbers-falling-india-wqxk9uygzy
  2. https://www.instamojo.com/blog/credit-on-upi-the-next-big-thing/

 

For more blogs, visit https://blog.sabpaisa.in

YOU ARE READING THE ARTICLE COURTESY: SabPaisa (SRS Live Technologies) – headquartered in New Delhi with eight regional offices including Mumbai, Bangalore & Kolkata – is a rapidly growing Fintech company having developed one of India’s most advanced AI-driven recurring payments platform bolstered by another of SabPaisa’s unique products: world’s first hybrid payment platform which has all the payment modes in a single checkout page, online and offline, from UPI to Cards to e-NEFT to e-Cash. Businesses that take SabPaisa’s payment gateway get real-time reconciliation and consolidated reports for all payments, recurring or one-time, online or offline, in a single dashboard, whether the payer is an 18-year-old in Kashmir paying through UPI or a 70 year paying through Cash in Kanyakumari. SabPaisa’s payments and collection application suite have already processed more than INR 12 Billion to date. Learn more about SabPaisa here:https://sabpaisa.in

 

 

 

 

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Banking digital payments Financial intermediary fintech payment gateway startup Uncategorized

Frauds in online payments explained

Simple tips to avoid frauds

A study conducted by the Center for Strategy and International Studies (CSIS) & McAfee show that online fraud is equivalent to 0.8% of the world’s GDP. Most importantly, payment frauds form a major part of this figure.

Online payment frauds connote the illegal transaction by fraudulently acquiring the customer’s credentials. For example, it takes the form of credit/debit card fraud, data theft, friendly fraud, phishing, etc. Incidentally, the advance of technology has advanced the fraud involved as well. Also, fraudsters have devised complex techniques to come out with sophisticated frauds which are very difficult to detect.

Online payment frauds
Some time tested techniques to handle online frauds
Learn the simple tips for combating online payment frauds

In this blog, I will take you through some simple yet time-tested methods to tackle online payment frauds. As they say, prevention is always better than cure.

1. Data Theft frauds

This most common mode of online payment fraud involves stealing digital information of customers like banking account details, credit/debit card information, PIN, etc. For example, in 2017, 1 in 15 people had their identities stolen. Subsequently, the hacking of the credential holder’s account takes place with the stolen data. Further, data theft is also a result of employee negligence in handling an organization’s data. 

Data theft prevention techniques:

  • Regular malware check on the computer system.
  • Use of debit/credit card with pin-chip technology.
  • Frequent change of password every 1-2 months.
  • Regular installation of updated software on systems.
  • Ensuring a secure and protected wifi connection.
  • Do not respond to unauthorized and spam emails.

2. Phishing frauds

In Phishing, hackers camouflage as financial institutions and contact the target victims. In doing so, the various adopted modes are email, telephone, text, etc. For example, the potential target luring happens with fake offers, false email links, attachments and emails from unknown senders. Further, studies show that phishing accounts for 90% of all the data breaches.

Phishing frauds prevention techniques:

  • Use of email filters.
  • Change in browser settings. Do not autosave passwords for payment sites.
  • Timely fraud report to banks to ensure speedy action cum monitoring.
  • Keep a track of URL of links in an email. It is a potent outlet to fraudulent sites that steal user data.

3. Friendly fraud

Friendly fraud is one of the toughest fraud to detect. Herein, a customer makes an online payment and then disputes the purchase by contacting the credit card issuer. Going ahead, the fraudster is refunded while the fraud continues on different payment platforms. Studies show that friendly fraud increases at a rate of 41% every two years. It is on the rise due to the increasing presence of e-commerce companies. Moreover, it is very challenging to detect friendly fraud due to the favoring of customers by credit card companies.

Nevertheless, an estimate of friendly fraud is made by observing a larger than usual average transaction. Also, a high frequency of order coupled with a high amount of stolen orders suggests the presence of friendly fraud.

Friendly fraud prevention techniques:

  • Call recording to verify the veracity of the order.
  • Saving the product delivery information by confirming the signature verification.
  • Blacklisting of suspicious, fraudulent customers.
  • Building cordial relations with customers to maintain a positive brand image.
  • Interconnectivity with online payment peers to obtain updated information about fraudulent customers.

4. Triangulation fraud

This fraud primarily involves three parties involved in a transaction. Firstly, a customer places an order with an e-commerce site. Secondly, the e-commerce site is a fraudulent seller which takes the order and reorders on another website using stolen payment credentials. Lastly, the legitimate e-commerce website unsuspectingly processes the fraudulent order. For example, triangulation fraud is common in the trade of electronics appliances, pet supplies, tools, etc.

Triangulation fraud prevention techniques:

  • Keep a track of repeated product selling behavior of the retailer.
  • Connect with triangulation fraud victims to ascertain the fraud strategy
  • Be in touch with auctions/marketplaces that are known to host fraudulent sellers.

5. Refund fraud

Refund fraud occurs in a situation wherein a customer engages in the frequent return of ineligible items without any concrete reasons. For example, stolen or damaged goods are frequently returned. It often results in e-commerce sites hiking prices to recover the loss due to fraudulent returns.

Refund fraud prevention techniques:

  • Flagging customers resorting to frequent returns.
  • Stricter return policies like discouraging returns without a valid receipt.
  • Serial numbers on goods for verification.

On the whole, payment frauds are an inevitable part of transactions in a digital era. However, the tips and tricks mentioned above can be used to reduce it considerably, if not eliminate it. In addition, be well prepared for any unforeseen scenarios during online payments. Always, keep in touch with the concerned banking and regulatory authorities to safeguard your business and buyings.

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