Making digital payment has become an everyday routine of most Indians. Indians have turned to digital payments because they found it more efficient and simple than the traditional payment system.
However, it is not without troubles. Security of data and online fraud are often cited against digital payment.
Blockchain-based payment systems have the potential to resolve most of the problems of digital payment, making it more secure.
Immediately after demonetization was announced on November 8, 2016, there was a spurt in digital payments. Debit card transactions at point-of-sale terminals surged, growing 105% in FY17, according to data from RBI.
This was possible because digital payment infrastructures were already in Place. The National Payment Corporation Of India, which was established in 2009, had brought digital payments instruments like RTGS, IMPS, UPI and Rupay much before the demonetization.
As more and more Indians are turning to digital payments, cases of online fraud and security breach have also increased.
A Mumbai-based investment banking analyst lost Rs 87,000 while buying beer online via a Unified Payments Interface (UPI)-based digital payments platform is one of the high profile examples of hacking and data theft.
Many cases like this have been reported across India in recent past.
Apart from money, personal information is also at stakes, as hackers can steal sensitive information of users when they are making digital payments.
In 2019, 1.3 million debit card users’ personal details were exposed online.
What makes India’s digital payment platforms so susceptible to online frauds? There is no problem with the platform. This new platform is still working on the traditional infrastructure where everything is centralized. That is why digital payment system is vulnerable to phishing and malware attacks.
Blockchain-based, decentralized payment architecture can potentially counter such attacks by being a far more difficult and therefore less attractive target.
How Blockchain Can Help
- Blockchain can make payment structure democratic, transparent and secure.
- Blockchain-based payment system will be decentralized, that means it will impossible for a hacker to launch malware attacks.
- Transparency is blockchain’s biggest strength. It can bring efficiency and transparency in the system, making the system more alert to malicious activity.
- Blockchain-based infrastructures are far more resistant to the kinds of attacks that centralized structures are exposed to.
- Another important aspect of blockchain technology is protecting user data with digital identities.