Security Concerns Rise As India Aims Cashless Economy

The move to make India a cashless country increases security risks for all citizens, with each account/wallet company becoming a single point of failure.

- Sidharth Shekhar

Post demonetization, we are making strides toward becoming a cashless society. This has led to digital wallet firms witnessing an unprecedented rise in their usage and popularity.

Recently chipset maker Qualcomm said that wallets and mobile banking applications in India are not using hardware-level security which can make online transactions more secure.

Paytm has been the most aggressive digital wallet firm to capitalize the government’s policy. To expand its service to small vendors the company ignored the privacy and data security concerns of customers. It pulled back its in-app point of sale feature that was designed for merchants to accept credit or debit card payments after security concerns were raised by payment networks such as Visa and MasterCard over data breach concerns.

“Post our launch, we have had several discussions with stakeholders on how we can make this process even more secure. Based on some suggestions from the industry, we have decided to add additional certifications and features before making it available to merchants,” Paytm said in a blog post.

Indian financial institutions and weak security

In terms of cybersecurity, India is way behind compared to other countries and this ignorance is evident in the Indian enterprises and financial institutions as well.

“Most of the banking or wallet apps around the world don’t use hardware security. They actually run completely in Android mode and users’ password can be stolen. In India, that is the case for most of all digital wallets and mobile banking apps,” Qualcomm senior director product management Sayeed Choudhury has said.

He said that even the most famous digital payment application in India is not using hardware-level security. “Reason we are saying that none of them is using it because we work with OEMs (original equipment makers),” Choudhury said.