Shouldering the responsibility of payment security

TWO years since the surge in adoption of digital payments, shoppers have seamlessly transitioned to their day-to-day use, with online payments becoming second nature for those buying goods and services online.

Reflecting the extent to which digital payments have become a fixture of shopping behaviour, the volume of PayNow transactions in Singapore alone in January to October 2021 hit S$64 billion, more than double and well above the S$25 billion recorded in the same period in 2020. Further data from PPRO also shows that the e-commerce boom is here to stay, with the sector set to grow from its value of US$5.9 billion in 2021, to an estimated US$10.7 billion over the next 5 years.

However, like anything that soars in popularity, digital payments have become a target for scammers. These bad actors recognise that many have adopted digital payment methods for the first time during the pandemic, and chance upon these users' lack of experience or understanding by convincing them to give away security details and part with their money.

In 2021, the number of users of digital payments above 60 years grew by up to 5 times faster than those younger. Looking at this data, it would be easy to conclude that this demographic might be the most susceptible to falling victim to banking scams and fraudulent transactions, but the recent spate of online banking scams have shown otherwise. Contrary to popular belief, the younger, digital-native generation who have grown up surrounded by technology, has actually been some of the biggest victims in the recent turn of events.

With scams on the rise, and more and more victims falling foul of them, how can the e-commerce and digital payments industry, as well as the banks, rally to combat attacks?

Building defences from the ground up

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For all the convenience of online shopping, there have been rising concerns about the security of users of digital commerce platforms. While banks and financial institutions have a responsibility to protect their customers' data and financial information, passively protecting systems and databases from potential cybercrime is no longer sufficient.

With such high rates of adoption by people from all walks of life, and with differing levels of financial literacy among the digital payments user base, more needs to be done to combat this wave of crime.

But with the payment stage being such a crucial part of whether a customer chooses to proceed with their purchase, a delicate balance needs to be struck between communicating the dangers of misuse of digital payments to users, and further encouraging their adoption and usage.

Put simply, a prolonged loss of consumer trust in digital payments, and an inability to fight back against scammers would cost banks, e-commerce platforms and payment service providers dearly.

Taking steps to bolster the security for users of digital payments, some payment players have adopted innovative technologies like artificial intelligence to identify scams early and stop them before they come to pass. Technology like this can play a crucial role in surveillance and also in ensuring the compliance of digital players, helping to give the end user peace of mind when it comes to paying online.

Consumers, ignorance is not bliss

Like many countries across South-east Asia, online shopping has risen significantly in Singapore in recent times, with 73 per cent of online shoppers in the country having shopped cross-border. While Singapore's financial regulator has said that consumers will not be held fully liable for financial losses of fraudulent acts, there is an argument that the consumer should still be responsible for having willingly, although unknowingly, given access to their bank details.

In an increasingly interconnected financial ecosystem, consumers cannot passively depend on third parties to protect them, no matter how robust the security infrastructure of their payment provider may be.

As a result, the onus is also on consumers to always practise vigilance - more so for the digital-native generation, who have grown up always having access to digital payments.

Unlike the older generation raised without easy access to digital financial services and thus possibly more cautious, the more savvy, younger generation could be more comfortable with such technology, and thus fall victim as a result of their complacency. For this audience, there is an argument that greater financial education is needed from an early age, with continued reinforcement from banks, e-commerce platforms and payment players key to ensuring education keeps pace with ever-developing scams.

Developing digital literacy to keep consumers safe online

For all our advances in digitalisation, this gap between digital consumption and digital literacy needs to be bridged. To plug the gap, some banks have taken on the responsibility to educate their customers and upskill them on financial and digital literacy, by launching education and awareness campaigns targeted at those who are at risk.

At the government level, steps have also been taken to detect and disrupt scams, as well as mitigate losses and to strengthen public education levels. For example, ScamShield, a scam prevention app, saw more than 722,000 SMSes reported to be used in scams, just within the first 6 months of its launch in November 2020 - and we can only imagine the extent of how many potential scams the public has been protected from since then.

But there is always more to be done, and now is the time that the education system needs to play a bigger role in preparing the next generation for a life even more immersed in the digital realm - implementing into academic curriculums the basics of cyberliteracy to better equip young people with the knowledge they need to recognise cyberthreats.

Our journey with digital payments has come a long way, and as the world continues to digitalise, scams will grow increasingly complex and sophisticated. Now, more than ever, the entire ecosystem needs to come together to fight against digital threats.

• The writer is vice-president of partnerships and head of Apac at PPRO.