Digital India drive by Government of India bears the objective of more online activities in every sphere to boost the cashless economy. Thereafter, even small retailers and shop owners started transacting through cashless models like Paytm. While the voice for the cashless economy is raised, major transactions are done through credit/debit cards or other digital methods like POS (point-of-sales) machines, digital wallets, etc. and minimize the circulation of liquid currency. Smart phones are taking bigger roles in order to carry the initiative towards accomplishment.
Advantages
Let us review the advantages of the cashless economy:
- Respite from queues for depositing your money, paying bills, booking tickets, etc. and thus eases our life by saving lots of our time and energy
- Increase of digital activities might minimize abundance and circulation of fake hard cash
- Easy to keep a track of multiple financial and banking accounts anytime
- Lower risk of losing money in case of theft even while traveling since you can block your card remotely; for cash, you can never get it back
- Easy to keep a proper and regular track of your money spent and helps to have a budget discipline
Disadvantages
Every system or initiative has its problem areas, the cashless economy is no exception:
- Too much dependency on debit/ credit cards and connectivity.
- Digitization might cut down lots of jobs.
- Increase in cyber crimes and online banking frauds
- Rise of mobile malware and banking Trojans
Role of mobiles in Cashless Economy
According to a recent report from Economic Times, urban India is fast reaching the saturation point with 51% market penetration while rural India with 16% is the future market for growth. It also added that the users in urban India grew at 9%, while growth in rural India is almost three times at 26%. These numbers clearly indicate that smart phones are gradually making inroads into our economy
Today it is almost impossible to imagine our life without smart phones. Now mobile apps steer our daily activities in every aspect starting from official communication to entertainment. Popular mobile brands are now moving towards mobile-first strategy around their products. For instance, brands like Quikr, Olx, Uber, Flipkart etc. now promote their presence on mobile devices first. Due to easily reach and availability of 3G and 4G networks, banks, and payment gateway companies are taking advantage of these high-speed networks to extend their payment infrastructure.
Popular Methods for Conducting Mobile Cashless Transactions
Cashless mobile payments are operated under banking and financial regulation through mobile devices. The wave of digital transformation gave a push to this technology and earned wide recognition till date. Here are few popular models of mobile payments:
- Mobile Wallets
Mobile Wallets help customers make one step payments through smart phone because the user’s card details are securely stored in the cloud. A customer just has to enter his/ her card information once. Some popular players in this space are PayTM, Mobikwik, Apple Pay, Google Wallet, Paypal, Square Wallet etc.
- Mobile Banking Apps
Today, major (almost all backs) banks are offering mobile banking apps on Android, iOS, and Windows mobile platforms. Not only that, it enables customers to keep track of their balance, transaction history, money transfer details. In fact, the bank representatives now encourage customers to go for mobile banking for its user-friendliness. These banking apps allow paying utility bills and generating OTP for online purchases. Even these apps help to locate banks or ATMs, change PINs etc.
- Carrier Billing
Customers can purchase on a mobile app using carrier billing. On the basis of the two-factor authentication process, which involves PIN and OTP, carrier billing charges purchases to the consumer’s account. It does not involve credit/ debit cards and thus it’s a safe alternative payment method.
- Contactless Payment
A customer can put his/ her credit card details in the smart phone (like Apple Pay) with the help of Contactless Payment. It is safely stored on the embedded smart chip for future use. Once the customer wants to buy at any store, he/she simply hold up the phone to the mobile payment reader at POS terminal. Using NFC or RFID the device/card establishes a connection with the POS and does a secured transaction.
- Payment Gateways
The payment gateway is an e-commerce service that processes credit/ debit card payments for online purchases. Payment gateways ease online transactions by transferring key information between payment portals like web-enabled mobile devices or websites and the front end processor or the banks. Payment gateways serve a crucial role in e-commerce transaction process and authorizing the payments between merchant and customer.
Security Challenges
In spite of being user-friendly, there are vulnerabilities too in these cashless mobile transactions which can be exploited by cyber criminals and result in disruption of services, money laundering and loss of revenue. Let us check some possible vulnerabilities below:
- Rogue Public WiFi
People have the general tendency of avoiding mobile data if public WiFi hotspots are available at any place. However, the security level of free public WiFi is not the same as home WiFi, additionally, the possibility of criminals implementing a Rogue WiFi device to capture the traffic cannot be ruled out. Furthermore, the possibility of getting infected by a Mobile Malware also exists when using such rogue networks, hence to avoid such possibility, there should be reputed anti-malware software installed on the phone.
- Android Repackaging Attack
With more than 95% market share, Android had the biggest market share in 2016-17. Considering the fact that the trend will continue, a common security threat of repackaging attack might also maximize. Repackaged apps are nothing but infected versions of popular apps. After downloading any popular Android app, the hackers obtain the codes with the help of reverse engineering. Then those codes (sometimes malicious) are added, repackaged and released. This requires a signature database and Zero day threats can never be detected with this. Repackaged apps are the one of the major reason of infected Android apps and restrain the users from multiple Android malware.
- Installing Malicious Apps
When the user installs any third-party app without checking its authenticity, there is a very high possibility of the device getting compromised and confidential user data being leaked. Thus it is always recommended to install apps from trusted hosting platforms and the app’s instructions and reviews should be read properly before installing it.
- Use of simple password and not using Multi-Factor Authentication
Weak passwords and PINs usage influence online attacks. That is why mobile vendors are implementing multi-factor authentication mechanisms which require more than one identity credential. It combines two or more independent credentials, such as what the user knows (i.e., password or PIN), what the user has (i.e., security token) and what the user is (i.e., biometric verification). The goal of multi-factor authentication is to create a layered defense and make it more difficult for attackers to perform an unauthorized access.
- Lost or Stolen Mobile Devices
Since mobile devices are prone to theft, it is advisable to implement Anti-Theft app, moreover, the users should always reset and wipe to factory defaults before selling the device.
Conclusion
With the rise in the usability of smart phones, it is quite obvious that smart phones are going to play a crucial role in giving digitization a push. At the same time, mobile security software companies are
1: Launching new Security Products for Android, iOS and Windows phones.
2: Private and Government sectors along with BFSI are offering consumers new and innovative mobile solutions for online transactions
In a nutshell, the growth of mobile devices used in India plays a major role in the country’s cashless economy. By 2019, the number of mobile and mobile internet users is expected to cross 730 million or more and give birth to a new revolution.
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