The digital payments ecosystem of India: Planning security today for a resilient tomorrow

Exploring the security and payments resilience opportunities and challenges in India, enabling the ecosystem to strengthen payments product and process security.

In brief

• As digital payments adoption continues to rise exponentially in India, the sophistication of attacks and adoption of emerging technology is increasing.
• Recent attacks on the supply chain highlight the need for resilient payments systems.
• An integrated approach to security and payments resilience across the digital payments ecosystem is imperative.

India has been at the forefront of digital payments adoption, and the last decade has seen product innovation, technology transformation, and the emergence of new participants in the country’s payments ecosystem. The next wave of digital payments adoption will rely on the resilience of the payments ecosystem and the customer’s trust in new digital payments products. Identifying and addressing cyber risks in payments systems and processes will be a critical enabler for organizations to grow their business. In our recent report "The digital payments ecosystem of India: Planning security today for a resilient tomorrow", we delve into the nuances that can enable the ecosystem in the country towards creation of a more secure and resilient digital payments landscape.

Fintech security: A key enabler for digital payments security

As fintech companies and new ecosystem participants champion the use of new-age technology, changes in the cyber threat landscape have impacted entities in the payments ecosystem, both small and large, leading to an increased focus on digital payments security. Recent incidents highlight how attacks on supply chains can impact multiple entities within the payments ecosystem, leading to a pernicious effect on businesses, consumers, and the country’s economy at large. As cyber threats and frauds grow in complexity and sophistication, the need for a proactive and a security-first approach has become more urgent and is a prioritized initiative on the board agenda for payments participants. As digital payments volumes continue to grow year on year, the increase in cyberattacks and frauds in the digital payments space is also evident in recent statistics.

Integrated cyber security and payments fraud intelligence

Payments fraud management is also an area where the payments ecosystem needs to adopt a collaborative approach to address the risk. While card-related fraud management frameworks have evolved, considerable progress is required in addressing use cases related to Real Time Payments (RTP) fraud use cases. Real time payments require real time fraud detection capabilities. Fintechs can support the ecosystem by innovating in this space and enhancing their fraud prevention and management solutions. The integration of cyber security threat intelligence and monitoring with fraud risk monitoring will be a key differentiator for organizations, both in terms of risk identification through stronger correlation and as an opportunity for the optimization of monitoring solutions.

As the payments ecosystem continues to evolve and grow rapidly, organizations in this space have a distinct advantage in terms of adopting new-age technologies and can become trendsetters in the field of cybersecurity. Building resilience into payments systems by enhancing detection, response and recovery capabilities is the need of the hour. As the digital payments ecosystem in the country is being recognized as a global success story, it is the collective responsibility of the payments ecosystem to build integrated security strategies and address payments product risks on priority.

Over the next few years, as payments participants continue to strengthen their regulatory compliance posture, it will also be critical for them to plan for addressing the risks associated with the adoption of new-age technologies and GenAI. The evolving regulatory compliance requirements, along with data privacy regulations in the country, will help payments participants to streamline and prioritize security and data protection initiatives.

Through this knowledge compilation, we delve into recent trends and topics to share our perspective on the current opportunities, challenges, and trends in the payments ecosystem in the country. We believe that it is imperative for the ecosystem to collaborate today for a stronger tomorrow. By enabling the adoption of payments security solutions to address the challenges of today and preparing payments participants for the problems of tomorrow, we are ‘All In’ to contribute towards building a more secure and resilient digital payments ecosystem in India.

Manasi N J – Director, Technology Consulting, Parag Sanghvi – Manager, Technology Consulting and Girish Purswani – Director, Technology Consulting have also contributed to the article.