The rapid growth of digital currency services in India brings with great possibilities as well as serious risk. This study closely observes the complex world of digital financial crime, and considers India’s many challenges with a rapidly growing step towards digital technology. This reviews how connected the Internet, what are the patterns of cyber financial offenses, and how to adopt new technology can increase the possibilities of fraud. This study provides important information about India’s digital financial security using detailed data and statistical methods. It helps to clarify the importance of digital knowledge to improve digital fraud trends, differences in places and cyber security.
Recently, there has been a huge increase in digital payments in India, especially after the ban on high-value currency notes in 2016 and during the Covid-19 epidemic. Changes in payment technology, government support, more people have smartphones and cheap internet, all of these have helped more people use digital payments rapidly. Companies providing payment services, with new businesses and more investment, are preparing better and easy ways to transact at low cost for users, encouraging more people to use digital payments.
In India, there have been many benefits from the rapid development of digital financial services, such as making banking easier for everyone and involving more people in the financial system. But with this increase, digital financial fraud has also increased. As more people in India are using digital payments and online banking, it has become very important to understand digital fraud for government officials, regulators and banks.
Recently, many people in India have started using digital financial services. This includes the inauguration of UPI (Unified Payments Interface) in 2016, the rise of digital wallet and access to more internet and smartphones. The number of digital payment transactions in India has increased dramatically, which increased from 162 crore (1.62 billion) in the financial year 2012-13 to more than 14,726 crore (147.26 billion) by February 2024, which is about 90 times in 12 years. UPI is used by all from small street vendors to large shopping centers. By 2022, India has the highest rate of digital transactions in the world, which is about 46% of global transactions, followed by countries like Brazil, China, Thailand and South Korea. However, this rapid change towards digital finance has also given the fraudsters an opportunity to take advantage of the weaknesses of the system.
Cyber criminals target unknown customers, banks and financial technology companies by new fraud methods. Different social and economic conditions in India make it even more difficult to deal with this growing problem of digital crime.
Research has found many common forms of digital financial fraud in India:
(A) Fishing and social engineering attacks: Cyber criminals cheat people by sending fake emails, SMS messages or social media posts that seem real. Their goal is to share sensitive information from users like password or credit card number.
(B) Unauthorized access to bank accounts and digital wallets: Frauds take advantage of weak security and reach someone’s bank account or digital wallet without permission. With this they can steal money or make fake shopping.
(C) Fraud mobile application and website: Some crooks designing fake apps or websites that look like valid financial services. Their purpose is to cheat users and share their personal and financial information.
(D) Card skimming and cloning: Unscrupulous persons use special equipment to steal information from credit or debit cards. They can also use fake ATMs to get this information, which they use to make fake cards for unauthorized purchases.
(E) UPI-based fraud and transaction kidnapping: Cyber criminals detect weaknesses in UPI system and do fraud transactions. Sometimes, they pretend to be a real user or capture the transaction already happening.
(F) Investment scams and Ponzi schemes: Fake investment opportunities and online promotion of Ponji scams have cheated many people in India, due to which they have to lose a lot of money.
(G) Identity theft and artificial fraud: Criminals use stolen or artificial individual information to open new bank accounts, obtain loan or carry out other illegal activities. This type of fraud is constantly changing as criminals are looking for new ways to take advantage of the weaknesses and take advantage of the growing digital finance scenario in India.
Digital fraud is a major problem in our world, which is becoming more digital day by day. Many researchers and reports have noticed the issue how big it is, how it affects people, and what trends do we see in specific places like India and at specific places like India. This summary shares important information from the famous sources, which shows how serious this problem is and why we need a quick solution.
(A) Global perspective
1.” LexisNexis Risk Solutions”
The 2023 cyber crime report shows a worrying increase in online fraud, increasing the rate of global attacks by 19% every year. This growth in North America was the highest 43%, while attacks in the e-commerce industry saw a huge increase of 59%. Automatic attacks in gaming and gambling sector saw an incredible increase of 103%.
The report talks about new types of dangers, such as the use of advanced AI technology in scams and continuous misuse of fast payment systems for fraud activities. The types of attacks in different fields and industries were different; For example, there was a decrease in attacks in the Asia-Pacific region, while in North America, there was a rapid growth.
However, the general trend is that cyber criminals are becoming more efficient and constantly active. The report emphasizes the immediate need for strong and diverse strategies to prevent fraud in all areas. Financial services, e-commerce, communication and gaming industries, face specific problems with all different types of attacks and methods. Mobile platforms, especially the Internet browser, are getting high at risk.
The report also mentions reforms in some countries such as the UK and Singapore, where the damage caused by scams due to the protective measures implemented has stabilized. It highlights working with countries, government action and advanced technology to detect fraud in this changing world of cyber crime. It discusses its role in the expansion of India’s potential new rules and boundaries for digital gaming, which can shape fraud activities in the region. Additionally, it suggests that the methods of fraud are becoming more complex, including strategies such as making fake identity and taking advantage of mobile channels.
2. SAS’s “Fraud Management Insights” report gives detailed information on fraud worldwide. The report prepared by Jewelin Strategy and Research and SAS studies digital fraud in 2023 globally. This report shows that after the Kovid-19 epidemic, which gave birth to many scams, new types of frauds are now coming out. The main fraud activities related to epidemic have declined, but new scams have come to light, such as romance scam, fake job proposal and investment scam. The study analyzes 12 different countries and suggests that the trends of fraud may vary greatly according to the region.
For example, South Africa is trying to make payments more official, Singapore is dealing with complicated phone scams, India is using more biometric recognition methods, and in the US, services such as “buy now, pay, pay later” are seen to be an increase in services. The report emphasizes the importance of strong fraud prevention strategies using artificial intelligence (AI). It suggests multi-factor authentication, alerts for suspected account activity and using effective monitoring systems. It is also important to build confidence with consumers with increasing use of digital payment systems.
In 2022, American consumers suffered a loss of $ 8.8 billion in various scams, showing a 30% increase compared to the previous year. The report provides eight experts suggestions to deal with fraud in today’s digital world, and emphasizes how important techniques such as AI, machine learning and biometrics are to detect fraud and prevent fraud in various fields. It also highlights advanced analysis in the fight against online fraud and the need for machine learning.
(B) Understanding India’s position
1. Varalakshmi and others (2024) studied cyber security problems in digital payment systems in India. Their research focuses on new types of dangers such as phishing (tricking people to inform people), malware (harmful software), data violations (unauthorized access to sensitive information), and identity theft (stealing person’s personal information for fraud) that affect digital payments. It also discusses how equipment (information coding), biometrics (using physical symptoms for safety, such as fingerprints), tooking (changing sensitive information with random tokens), and how equipment affects safety in these systems.
The study collected their views using a survey with 105 people. Results reflect moderate positive relations between digital payments and payment gateways (R = 0.527), payment and digital payment safety (R = 0.655), and cyber security measures and digital payments (R = 0.550). Conclusions emphasize how safety and digital payment systems are connected, and strong cyber security practices, educating users and emphasizing the need to work together to work together to create a safe and reliable digital payment environment.
2. Amay, Lonkar and others (2024) noticed how ready consumers are to deal with fraud in digital payments in India. He examined such factors such as how much people know about fraud, what protective steps they take, and how their reaction to fraud attempts. After analyzing the reaction received from 372 consumers using the review of existing literature and using data such as Anova and Kai-Square, he found that overall, the consumers were somewhat ready. However, his awareness about fraud was low, his safety measures were average, and he reacted well when cheating. The study also stated that no existing structure was present to measure the preparation of consumers and it was recommended to improve. These included better authentication and awareness programs by financial organizations to help the installation of a central fraud registry by central banks and help consumers to be more prepared.
3. Dr. Selvi, S. (2024) saw how digital technology has changed banks in India, especially after major changes in the use of money by the government. Studies show that online banking has made transactions easier and faster for people. The government has also encouraged people to use cashless payment methods, which helps in this process. However, as more people are using digital methods for payment, online scams and fraud have increased in banks. The purpose of this study is to detect and organize new types of online fraud due to digital banking. It also wants to understand the main reasons that give rise to these dishonest acts in India’s banking system.
This research uses a method called theoretical research, which means that it is based on the study of laws and principles. This study studies closely using two main approaches to digital financial fraud in banks: analytical and descriptive. Most of the information is obtained from secondary sources, such as books, magazines, magazines, articles and websites such as researchgate and Google Scholar. These sources helped collect important articles. Additionally, statistics were also collected from the Reserve Bank of India reports, national surveys, government documents, statistical database, press information bureau (PIB), news reports, articles and reputed magazines for this study.
The main goal of this research is to provide a detailed and overall analysis of digital financial fraud in India. This will help to fill the important interval of knowledge and provide useful information for individuals and organizations associated with the digital finance world. This study focuses on many major regions: 1. classifying and analyzes common methods of digital financial fraud. 2. To check where cyber financial offenses occur in different states of India and how the level of digital knowledge affects the frequency of fraud reports. 3. Find out the causes of increase in digital financial fraud. 4. To evaluate how digital financial fraud affects the economy and society as a whole.
There are three main parts of this article: How people in India connect digitally and how to use payment, where there are cyber crimes related to money in different fields, investigations, and digital skills related statidation and how often people in different Indian states report cyber fraud. The purpose of each part is to help us understand these subjects better.
(A) Current status of digital connectivity: India is the second largest country in the world in terms of phone services. By the end of December 2023, 85.23% of people were using telephones. By December 2023, the total number of telephone users in India reached 1,190.33 million. Of these, the number of people using wireless phones was 1,158.49 million. The city of Delhi was the highest number of phone users per capita, while Bihar shows the lowest, which shows that the phone service is much better than others in some areas.
The number of users using broadband internet in India increased from 149.75 million in FY16 to 904.54 million by the middle of FY 2023 (April-December). India also ranks second at the second place in terms of internet users. It is one of the world’s largest data users. In 2019, India was the second largest market for apps on Google Play, which is expected to grow at the rate of 11% every year from 2018 to 2022. In 2020, 14% of all app downloads worldwide came from India. In 2022, Indians downloaded more than 28 billion apps, which was 5% of a total of 625 billion apps globally.
The number of downloaded apps increased from 12.07 billion in 2017 to 19 billion in 2019. This information shows that India’s mobile market is well developed, many people use phones in cities, the number of people using the Internet in rural areas is increasing, and is a strong step towards better internet services, especially through mobile.
(B) Status of digital payment landscape
By March 2024, 218,815 ATMs and 8.90 million points of cell (POS) terminals are available for transactions. The use of QR code has increased considerably, by 2024 more than 346 million UPI QR codes have been registered. There has been a significant increase in the number of credit cards, which has increased from 62 million in March 2021 to 101.8 million by March 2024. There has also been a slight increase in the debit card, which has increased from 898 million to 964 million during the same period. Between March 2021 and March 2024, the number of credit card transactions on pos terminals increased from 62 million (worth ₹ 188,726 crore) to 180 million transactions worth ₹ 603,781 crore. Additionally, online credit card transactions increased from 30.6 million to 163.9 million. There has been a tremendous increase in UPI and QR code payment, and banks are now reporting millions of UPI QR codes.
Starting from only one million transactions in 2016, UPI has now crossed 10 billion (1,000 crore) transactions. The RBI-Digital Payment Index (RBI-DPI) measures the growth of digital payments over time in India based on five main factors. These are factors: (i) Payment Competent (Weight 25%), (ii) Consumer Demand (10%) for Payment Infrastructure, (III) Payment Payment Infrastructure Supply (15%), (IV) Payment Performance (45%), and (v) Consumer Focus (5%). Each factor contains several small factors with measuring data. RBI-DPI reached 445.50 in March 2024, while its base was 100 in March 2018, which shows how much digital payment has been improved at the national level. This data shows that India is moving rapidly towards digital payments, as more people prefer electronic and mobile payment options, while their access to cash systems also remains.
(A) Cyber crime cases in India: The total number of cases of cyber crime in India increased from 50,035 in 2020 to 65,893 in 2022. This indicates an increase of 31.7% in three years. The highest number of cyber crime cases have been reported in Telangana (15,297), Karnataka (12,556) and Uttar Pradesh (10,117) states, which is about 57% of India’s total cases. Many technical companies and areas with large cities are often recorded more cases. This can happen because more people use the Internet and do online transactions. In Maharashtra, despite Mumbai being a major financial city, only 8,249 cases were reported, lower than both Telangana and Karnataka. There is a large part of these cases in the southern states including Telangana, Karnataka, Tamil Nadu and Kerala.
(B) Civil Financial Cyber Fraud Reporting System in 2023: In 2023, 1,128,265 complaints of cyber fraud were filed across India. This suggests that either cyber fraud has increased significantly or, more likely, people are better in reporting these cases because of the civil financial cyber fraud reporting management system. In 2023, Uttar Pradesh has the highest number of 197,547 complaints, followed by 125,153 complaints in Maharashtra and 121,701 in Gujarat. This is different from 2022 when the highest number of cyber crime cases were registered in Telangana, Karnataka and Uttar Pradesh. Several cities and technology states like Maharashtra, Karnataka and Delhi still have many cyber fraud cases, which are similar to the 2022 cyber crime data.
This comparison shows that although the number of cyber incidents is increasing overall, the new system of reporting financial fraud has increased a huge increase in the number of reports reported. It also indicates possible changes in cyber offenses and cheating places, which can be caused by various methods of reporting or new trends in cyber criminals activities.
Digital literacy and cyber fraud reporting patterns in India: A cross-section analysis of state-level data. Digital literacy means that people and community can understand and use digital techniques for important tasks of their daily lives. In simple words, it has the ability to use computers, smartphones or internet for daily activities and to connect online to others. If at least one person can run a computer in a house and use the Internet (for people aged 5 years and above), that house is called digitally literate.
In India, only 38% of homes are considered digitally literate. In cities, digital literacy is better with 61%, while in rural areas it is only 25%. The National Statistics Office (NSO) under the Ministry of Statistics and Program Implementation conducted a survey called Multi-Settlement Survey in India centered on education and ICT skills under the 78th National Sample Survey (NSS) from 2020 to 2021, whose report will be published in March 2023. To check the information and communication technology (ICT) skills of the people, people were asked in the survey whether they could do nine tasks on the computer.
Most people said that they cannot do normal work. Only 25% of people could copy or move a file or folder, only 6% could use basic mathematics formulas in the spreadsheet, and only 5% could create electronic presentation using a software.
This article presents important information about India’s digital world and how to report cyber fraud by people: (a) Digital Development: India is becoming a big player in the digital market, with high telephone usage (85.23%) and comprehensive internet access (904.54 million subscriptions).
However, there is a major difference in digital skills between cities and rural areas (61% vs. 25% in cities). Digital payments are growing very fast, especially with UPI, which is doing much better than the RBI-DPI score of 445.50 in March 2024 compared to 100 of March 2018. (B) Increase in cyber crime: Cyber crime cases increased by 31.7% from 2020 to 2022. There are major differences in states, technology-centric states have more incidents. (C) Digital skills and fraud relations: How good people have information about digital skills and how often they report fraud, there is a small positive relationship (0.2516). However, statistically this relationship is not very strong (P-value: 0.1390).
The relationship between digital skills and fraud reporting is complex and is affected by many factors. These findings highlight the need for the following: – Programs helping to improve digital skills – better awareness about online safety – more research focusing on various factors – special strategies for states keeping in mind the use of local population and technology. The study shows that while India is becoming increasingly digital, it is very important to pay attention to security and education to ensure that the digital environment is safe and strong.
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