Paytm is experimenting with facial recognition technology to secure mobile transactions. MobiKwik has introduced card checks and device ID checks. Oxigen Wallet has launched mobile virtual cards powered by Visa for users without debit or credit cards to transact securely on ecommerce sites.
These companies are all in the fastgrowing digital wallet space and are trying to ward off what could emerge as the biggest threat to their business in 2016 - fraud.
Within the realm of digital wallets, mobile recharges, bill payments and ticketing and recharge applications are the most vulnerable due to the benefits and cashbacks that go back into customers' accounts, say experts. Mobile recharges, bill payments and ticketing and recharge applications account for about 95% of digital wallet frauds.
"India offers a very unique challenge because consumers are gullible," said Vijay Shekhar Sharma, cofounder of Paytm, which claims to be the digital wallets leader with over 120 million registered users and more than 2.5 million transactions daily, on average. "So, we have to find out ways to run the system even more than differently than the rest of the world."
Paytm itself blocked about 5.5 million users in 2015 after they were hit by fraud. The company even barred about 17,000 of its 1 lakh merchants over the past eight months.
"Fraud is fast becoming an area of concern for retailers as they gear up for further growth in online commerce" with the number of users making online transactions growing exponentially, the Associated Chambers of Commerce & Industry of India said in a recent report. With the surge in the number of companies in the online wallet space, the risk of fraud has been rising in recent months, Mumbai-based digital payments company TranServ said. During September-October, mobile wallet fraud peaked to 3-3.5% of value, 15-20 times the levels in ecommerce, it said.
The problem areas are the same for all wallet companies, which are mostly focussing on controlling and preventing fraud while adding customers to widen market share.
India has about 135 million wallet users, according to market research firm and consultancy 6Wresearch. PayU Money, Paytm, MobiKwik, Oxigen and My Mobile Payments have captured around 70% of the market revenue, in no particular order, senior consultant Rajat Kharbanda said.
Fraudulent transactions through mobile wallets are estimated at about 1% of the market at present and experts expect them to rise to more than 2% in a couple of years, when the customer base would have widened.
Media Source: India Times