What are the risks associated with Netbanking and Digital Wallets & How to Mitigate them

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Find out what are the risks associated with India's favourite payment methods.

Published

March 10, 2024

Reading Time

minutes

Shuaib Azam

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1. Cybersecurity threats

Net banking and Digital wallet users in India face cybersecurity threats such as phishing, malware, and hacking attacks that can lead to unauthorised access to bank accounts and theft of personal information.

Risk	Net Banking	Digital Wallet
Phishing attacks	Phishing attacks are a common threat to net banking users, where fraudsters create fake websites that look like legitimate bank sites to steal login credentials and other sensitive information.	Digital wallets are also vulnerable to phishing attacks, where scammers send fraudulent messages or emails that appear to be from the wallet provider to trick users into providing login credentials or personal information.
Hacking and malware attacks	Net banking accounts are susceptible to hacking and malware attacks, which can result in unauthorized access to sensitive information and financial transactions.	Digital wallets are also vulnerable to hacking and malware attacks, which can lead to unauthorized access to payment information and fraudulent transactions.
Identity theft	Net banking users may fall victim to identity theft, where scammers steal personal information to open new accounts or obtain credit in the user's name.	Digital wallet users may also be at risk of identity theft, as personal information such as name, address, and phone number are stored in the wallet.

2. Regulatory risks

The Reserve Bank of India (RBI) is in charge of regulating net banking and digital wallets in India. There is a chance that regulatory changes, like changes to transaction limits or fee structures, wallet limits, or customer verification requirements, could affect the industry.

3. Limited acceptance

While net banking is widely accepted in India, there may be situations where it is not accepted as a payment method, such as when paying for goods or services at a physical store.

Digital wallets may not be accepted as a payment method in all situations, especially in rural or remote areas where digital infrastructure is limited.

4. Transaction failures

Net banking and Digital wallet transactions may fail due to technical issues or connectivity problems, leading to delays or unsuccessful transactions. Since both netbanking and Digital Wallet depend on an active internet connection to make transactions.

5. Fraudulent transactions

Net banking and Digital wallet users in India may be at risk of fraudulent transactions, where scammers gain access to their accounts and make unauthorized transactions.

6. Limited customer support

Both Net banking users and Digital Wallet users in India may face challenges in reaching customer support or obtaining quick resolutions to their issues.

Risk of account closure or loss of funds due to non-compliance with wallet terms and conditions

7. Currency fluctuations

If a digital wallet is used to hold cryptocurrency, the value of the currency may fluctuate significantly, which could result in gains or losses.

8. Risk of account closure

With Digital wallets there is a risk of account closure or loss of funds due to non-compliance with wallet terms and conditions. It is also important to remember that digital wallets are not insured by the government. This means if the service provider goes out of business, you may not be able to recover your money.

How to mitigate the risks associated with Digital Wallets

There are several ways to mitigate the risks associated with digital wallets and net banking in India. Here are some best practices you can follow:

For Digital Wallets:

Choose a reputable digital wallet provider that has robust security measures in place, such as two-factor authentication and encryption.

Use strong passwords or passcodes for your wallet account and avoid using the same password for multiple accounts.

Regularly monitor your wallet transactions and report any suspicious activity to the wallet provider immediately.

Be cautious of phishing emails or text messages that may request sensitive information or prompt you to download malicious software.

Use public Wi-Fi networks sparingly, as they can be vulnerable to attacks.

For Net Banking:

Use a strong and unique password for your net banking account and avoid sharing it with anyone.

Regularly monitor your account transactions and report any unauthorised transactions to your bank immediately.

Avoid using public computers or networks for accessing net banking.

Check for the validity of the bank's website or mobile application URL before logging in and ensure that the connection is encrypted.

Enable two-factor authentication if available.

Overall, it's important to stay vigilant and follow best practices to protect your digital assets and personal information. By adopting these measures, you can reduce the risks associated with digital wallets and net banking in India

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