The latest annual report from the Reserve Bank of India supports Agrawal’s assessment that the number of such frauds is growing rapidly.
Card and internet fraud accounted for nearly 40% of the total number of bank frauds registered in fiscal year 22. This is only second only to progress fraud, which has contributed to about 42% of total fraud reported.
The number of frauds has also increased over the years. In the year ended March 2022, the number of card and internet frauds amounted to 3,596, which is 41% more on an annual basis. The total number of frauds registered in the 22nd financial year was 9,103.
The amount of these frauds, although low, is also growing. In the last financial year, the total amount involved in card and internet fraud was Rs 155 crore, up 30% from a year earlier.
According to internal estimates of HDFC Bank, about 75-85% of customers who have been victims of such fraud are under 45 years old. Metropolitan cities account for about 60% of all digital fraud by number, while rural areas account for less than 7%.
About half of the frauds in the unified payment interface that fraudsters use regularly involve amounts below Rs 10,000, while only 1-2% of frauds involve Rs 1 or more or more, according to the bank.
“Changing customer behavior and digitizing the authorization process is the only way to adequately tackle digital retail fraud,” said Asim Parashar, Partner, PwC India.
Earlier, when systems marked a suspicious transaction, banks manually checked the authenticity at the back end. “But the speed of digital transactions has increased so much that they have to rely on artificial intelligence and machine learning to deal with fraud without affecting the speed at which the transaction is approved. Otherwise, the customer experience is affected, “Parashar added.