UNIVERSITY OF MUMBAI

ACADEMIC YEAR
2023-2024
 UNIVERSITY OF MUMBAI

LILAVATI LALJI DAYAL COLLEGE OF COMMERCE (NIGHT)

375/77 S.V.P. ROAD, CHARNI ROAD (E), MUMBAI - 400004

A PROJECT REPORT ON
“A STUD ON ELECTONIC PAYMENT FRAUD FACED BY
CONSUMERS”

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR

THE AWARD OF THE DEGREE OF BACHELOR OF COMMERCE
(ACCOUNTING AND FINANCE)

SUBMITTED BY
NAME: MAKWANA KARAN VIVEKBHAI

T.Y.B.A.F. SEMESTER
VI

PROJECT GUIDE

MS. NAMRATA BHALERAO

ACADEMIC YEAR
2023-2024
 UNIVERSITY OF MUMBAI

LILAVATI LALJI DAYAL COLLEGE OF COMMERCE (NIGHT)

375/77 S.V.P. ROAD, CHARNI ROAD (E), MUMBAI - 400004

A PROJECT REPORT ON
“A STUD ON ELECTONIC PAYMENT FRAUD FACED BY
CONSUMERS”

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR

THE AWARD OF THE DEGREE OF BACHELOR OF COMMERCE
(ACCOUNTING AND FINANCE)

SUBMITTED BY
MAKWANA KARAN VIVEKBHAI

NO: 09

T.Y.B.A.F.

SEMESTER VI

PROJECT GUIDE

MS. NAMRATA BHALERAO

ACADEMIC YEAR
2023-2024
 DECLARATION

I, the undersigned Ms. Makwana karan Vivek Bhai. student of Lilavati Lalji Dayal College
of Commerce (Night), 375/77 S.V.P. Road, Charni Road (E),Mumbai – 400004 studying in
T.Y.B.A.F. hereby declare that the project work entitled “A STUDY ON ELECTONIC
PAYMENT FRAUD FACED BY CONSUMERS” submitted to the University of
Mumbai is a record of an original work done by me to the best of my knowledge under the
guidance of Ms. Namrata Bahalerao.

This project work is submitted in the partial fulfillment of the requirements for the award of the
degree of Bachelor of Commerce (Accounting and Finance). Theresults embodied in this project
have not been submitted to any other Universityor Institute for the award of any degree or diploma.

I hereby further declare that all information of this document has been obtained and presented in
accordance with academic rules and ethical conduct.

Name and Signature of the Student

(Mr. makwana karan vivek bhai)

Date:
Place: Mumbai
 CERTIFICATE

It is certified that this project on “A STUDY ON ELECTRONIC PAYMENT FRAUD

FACED BY CONSUMERS” has been prepared and submitted by Makwana Karan Vivek

bhai ROLLNUMBER:09 under me

guidance during the academic year 2022-2023, which is being submitted in partialfulfillment of the

requirement of the Project Work as part of Third Year SemesterVI of the “Bachelor of Commerce

(Accounting and Finance)” by the University of Mumbai.

MS. NAMRATA BHALERAO External Examiner

Project Guide

MRS. JENNIFER D’CRUZ

Seal of the college I/C Principal

Date of Submission:

Place: Mumbai
 ACKNOWLEDGEMENT

I take great pleasure in presenting my “Project Report”. It is now time to

expressmy hearty gratitude to all those without whom this report would have
failed to metamorphosed into reality.

At the very outset hearty thanks to my guide Ms. Namrata bahalerao

for giving me an opportunity to make a project on “A STUDY ON
ELECTRONIC PAYMENT FRAUD FACED BY CONSUMERS” I
am also thankful for her perseverant assistance in importing the required
qualities in me for efficient working and for her unflinching help and
consistent inspiration.

I am also thankful to MRS. JENNIFER D’CRUZ who have helped me in the

way they could.

Last but not the least I owe a lot to my family and friends who have supported
methroughout my project.

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 INDEX
SR TOPICS PG
NO. NO.
1 INTRODUCTION 3-26
DIFFERENT MODES OF DIGIDAL 5
PAYMENT (2016-2024)
1.1 NEFT 5
1.2 RTGS 6
1.3 Advantages 6
1.4 Disadvantages 7
1.5 Mobile Wallet 7
1.6 The impact of COVID-19 pandemic on payment 15
behaviour
1.7 Types of frauds 18
1.8 Measures for fraud prevention and detection 23
1.9 Security in e-payment process 25
1.10 Awareness and education 25
1.11 Protection from internal threats 25
2 REVIEW OF LITERATIURE 27-33
3 RESEARCH METHODOLOGY 34-40
3.1 Research Statement 34
3.2 Objective of the study 34
3.3 Scope of the study 34
3.4 Sample size 40
3.5 Data analysis tool 40
3.6 Limitation of study 40
4 DATA ANALYSIS 41-55
5 DATA INTERPRETATION 56-57
6 FINDINGS & CONCLUSION 58-59
7 SUGGESTION & RECOMMENDATION 60-61
8 REFFRENCE 62
9 APPENDIX 63-65

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 TABLE INDEX

TABLE PG
NO. TOPIC NO.

1 1.1 Value of frauds vis-a-vis the digital payments 14

transactions (cards and internet banking)

3 3.1 Implement payment fraud detection methods (that 36

simultaneously improve CX)
Data analysis and Interpretation

4 4.1 Age 43

4.2 Gender 44

4.3 Qualification 45
4.4 Use of electronic payment 46

4.5 Fraud transfer method 47

4.6 Victims of fraud 48

4.7 Mode of fund transfer 49

4.8 No. of frauds in a year 50

4.9 Preference 51

4.10 Opinions 52

4.11 Security measures 53

4.12 Fraud prevention 54

4.13 Recommendation 55

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 CHAPTER-1

INTRODUCTION

With the development of the Internet in the 1990s and subsequent evolution of
electronic commerce (e-commerce) have given rise to a dynamic business environment
where transactions take place without face-to-face interaction. The International
Telecommunication Union reported that internet is quickly becoming the first stop for
people for making decision about buying services and products over internet and that
the number of internet users has reached 2.3 billion in 2011. The increase in the volume
of transactions has given rise to numerous electronic payment (e-payments) systems.

Recent studies (Manning 1998, Wortington 2000) agree that electronic payment
transactions have been in use for quite some years, like automatic teller machines
(ATM), credit and debit cards, direct deposit and direct payment. In no pay Online
payment report (2011) found that there is massive growth in the market for digital goods
and this has given rise to numerous payment systems making the process of payment
over the Internet easier for consumers. E-payment ensures smooth, secure and efficient
transactions in e-business.

However, the development of e-payment methods has expanded and with it the fakery
has inevitably kept pace. As a result, the consumers face a number of risks to personal
information and have second thoughts of giving their credit account information over
internet (2002). A recent study found that more than 7 million consumer complaints
have been received during the period from 2007 to 2011and a total of 990,242 of these
complaints were related to frauds The Consumer Sentinel Network (2012) (CSN).
Consumers have reported paying over $1.5 billion in those fraud complaints. According
to CyberSource (2012) found that merchants have reported losing an average of 1.0%
of the total online revenue to fraud. It is also reported that the fraud rate of international
order is 2% more than domestic orders. For the merchants managing e-frauds remain
to be major and growing cost. Fraud in e-payment transaction is a global problem. We
find fraudsters manoeuvre in all countries and industries.

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The purpose of this research is to study frauds in e-payments transactions, in order to
point out some prospective threats and countermeasure required to reduce frauds. This
paper discusses e-fraud (electronic fraud) and the different types of frauds in e-payment
transactions. It further addresses various possible measures for prevention and detection
of frauds in order to minimize frauds and make internet a safer, sound and trusted
environment to consumers and merchants.

The consensus around the origin and the forms of ancient money has kept changing
over the course of recorded history. But what has not changed over the years is what
money does; broadly, it facilitates trade in goods and services as medium of exchange
and acts as a credible store of value. Modern day trade demands massive payments to
be settled fast over long distances with minimum transaction cost. Evidently, to suit
these needs the payment systems are being digitized globally.

Cash, however, remains a crucial part of the trade. Therefore, the discourse on the
current age payment system revolves around cash vs digital transactions. A digital
payment, often known as an e-payment, is a method of making electronic payments
between a payer and a payee. Both the payer and the payee use digital modes to
complete the transaction. Right from barter system to paper money, there has been a
huge evolution in the modes of payment in India. And now in the second decade of the
millennium with the youth and coming generation, cashless i.e., digital payment mode
is the new phase of payments. Before the evolution.

The basic concept of traditional banking was that the users have to go the bank for the
primary banking requirement such as withdrawal or deposit of cash, funds transfer,
verifying statement of accounts etc. It has been called as the original banks which was
the method of past in the economy. They were the original commercial mediators to
provide bank accounts. From the exterior they had the big buildings with pillars made
by marbles but in the interior, it had an abundance of money in the box. This has been
called “Bank”.

They were big athletes in the commercial markets. They converted the savings of the
house into loans for business as an investment. Traditional Banking designed on IT

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acceptance. The Indian Banking Sector arose in the world of technology in the
beginning of 1990s. In India public sector banks have been influenced by the banking
sector, which occupied above 80% base of total asset (Gupta & Gupta, 2020).

Different Modes of Digital Payment (2016–2024):

1.1 NEFT:

NEFT stands for National Electronic Funds Transfer. Started in November 2005, NEFT
is an electronic funds transfer system set up and managed by the Reserve Bank of India.
NEFT allows the online transfer of funds from one NEFT -enabled bank account to
another.

Following is the step-wise flow of NEFT transaction.

An individual / firm / corporate willing to transfer funds through NEFT can use the
internet / mobile banking facility offered by his / her bank for initiating online funds
transfer request. The remitter has to provide details of beneficiary such as, name of the
beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the
beneficiary bank branch, account type and account number, etc. for addition of the
beneficiary to his / her internet / mobile banking module. Upon successful beneficiary
addition, the remitter can initiate online NEFT funds transfer by authorising debit to his
/ her account. Alternatively, the remitter can also visit his / her bank branch for initiating
NEFT funds transfer through branch / off-line mode. The customer has to fill-in the
beneficiary details in NEFT application form available at the bank branch and authorise
the branch to debit to his / her account to the extent of the amount requested in NEFT
application form.

Case example: Narendra Pal, a government school teacher in Zirakpur near Chandigarh,
received an SMS just before midnight informing him that Rs 10,000 had been
withdrawn from his account through an ATM in Surat1. Before he could comprehend
what was happening, he received two more messages about withdrawals of Rs 10,000
and Rs 20,0001. The first debit happened a few minutes before 12 midnight, allowing
the fraudster to transact again immediately as the withdrawal limit for the next day set
in.

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Despite Pal not having shared his bank account or ATM card details with anyone, he
fell victim to online fraud. He reported the fraudulent transactions to his bank
immediately by calling the helpline number, wrote to the bank branch and the RBI, and
also filed a complaint with the crime branch’s cyber cell. However, it took him more
than two months and multiple visits to the branch to get his money back.

This case highlights the importance of being vigilant while making NEFT transactions
and the need to report any suspicious activity to your bank immediately. Always
remember to keep your banking details secure and never share them with anyone.

1.2 RTGS:

Real-time gross settlements are a process that is used for high-value inter-bank
transactions. These transactions typically require instant and full clearing and are
generally done by the central bank of the country. RTGS reduces the overall risk as
these settlements are made almost instantly throughout the day. It is not like National
Electronic Funds Transfer (NEFT), in which settlements are made in batches. Hence,
the charges involved in the real-time gross transfer of funds may incur higher costs for
customers.

Here are some of the advantages and disadvantages of RTGS:

1.3 Advantages:

 Real-time Transfer: The fund transfer occurs in real time, which means that the
funds are credited instantly to the beneficiary’s account1.
 High-Value Transactions: RTGS is predominantly used for high-value
transactions1.
 Reliability: The system is highly reliable and is powered by the RBI1.
 Immediate Clearing: It offers immediate clearing1.
 Safety: Using the RTGS method reduces the delivery risk (especially of high-
value transactions) and a time lag in completion of transactions as the
transactions happen in real time4.

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  24/7 Availability: It is available 24/75.

1.4 Disadvantages:

Cost: RTGS can often incur a higher charge than processes that bundle and net
payments2.
Minimum Limit: The minimum transaction amount is INR 2 lakh, which might not be
suitable for smaller transactions.

1.5 Mobile Wallets:

A mobile wallet is a way to carry cash in a digital format. You can link your credit card
or debit card information on your mobile device to the mobile wallet app or You can
transfer money online to a mobile wallet. Instead of using your physical plastic card to
make purchases, you can pay with your smartphone, tablet, or smart watch. An
individual's account. It is required to be linked to the digital wallet to load money into
it. The majority of banks have their own email, wallets and some private companies,
e.g., Paytm, Free charge, Mobikwik, Oxigen, mRupee, Airtel Money, Jio Money, SBI
Buddy, Itz Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets,
Speed-Pay etc.

Google pay:

Google Pay is a popular mobile wallet and digital payment app. As part of the Google
ecosystem, it has scaled up its user base quickly. With Google Pay, you can send money
to friends, pay bills, and buy online, all via UPI and directly from your bank account.
Since Google Pay works with your existing bank account, your money is safe with your
bank. There’s no need to worry about reloading wallets and you don’t be transferred
into your bank account. Now you can also recharge your mobile or monthly utility bills.

has witnessed a notable surge in financial fraud cases in the last few years. According to
Google, the company prevented financial scams worth ₹12,000 crore on their instant
payment’s app — Google Pay, in the last one year. The company also said that GPay has

7|Page
also declined one lakh transactions every day after AI models detected that the transaction
could be suspicious.

Google spokesperson said that the company had taken action against almost 3,500 lenders
in cases of fraud and non-compliance. Google said that they have collaborated with the
Fintech Association for Consumer Empowerment (FACE) and onboard them as a priority
flagger, as part of its efforts to combat predatory digital lending apps on google play store.

Financial frauds, ranging from online scams to complex Ponzi schemes, have raised serious
questions about the efficacy of regulatory measures and the need for heightened vigilance
in the financial sector. To safeguard people from increasingly sophisticated financial scams,
Google announced the launch of its flagship program, DigiKavach — an early threat
detection and warning system designed to identify and study emerging financial fraud
patterns. Google said that DigiKavach studies the methods and modus operandi of
scammers and collaborates with the wider ecosystem of experts. The new program aims to
identify and mitigate new scams. Google believes that the initiative will protect users from
scams, malware and online fraud.

“To fully realise the potential of digital, ensuring the safety and security of individuals online
is not just a necessity, but an imperative. With DigiKavach, we're doubling down our efforts
to protect people against ever-evolving financial scams and fraud. Leveraging our internal
expertise, we're focused on understanding and detecting threats early so we can act quickly
and effectively to prevent the spread of scams and share our insights and findings with
committed experts," said Saikat Mitra, Vice President & Head of Trust & Safety, Google
APAC.

Paytm:

Paytm is a payment app in India providing e‐wallet services; it is also the most prominent
mobile e‐commerce app in the world’s third‐largest economy. This article uses Paytm as a
case study to better understand the global platform economy and its implications for social
and economic inequities. We contextualize the emergence of Paytm by drawing attention to
its relationship with India’s developing digital infrastructure and marginalized
populations—many of whom are part of the platform’s user base. We use a political

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economy lens to investigate Paytm’s market structure, stakeholders, innovations, and
beneficiaries.

Our research is guided by the question:

What resources, infrastructures, and policies have given rise to India’s digital payment
ecosystem, and how have these contributed to economic and social inequities? Accordingly,
we audited the international and Indian business press and Paytm’s corporate
communications from 2016 to 2020. Our analysis points to the tensions between private and
public interests in the larger platform ecosystem, dispelling notions of platforms as neutral
arbiters of market transactions.

We argue that Paytm is socially beneficial to the extent that it reduces transaction costs and
makes digital payments more accessible for marginalized populations; it is detrimental to
the time that it jeopardizes user data and privacy while suppressing competition in the
platform economy.

Paytm's customers:

Paytm's mission is to serve its Indian customers, especially mobile-phone users. Many
Indian customers believed that the digital world made it simple for them to open a bank
account. It turned out, however, that this was not the case. The concept of simple online
payments fell short, and consumers had nothing but a bad experience. Paytm presented itself
as a superior option in this regard.

Paytm's Customer Relationships:

To keep in touch with its clients Paytm has a customer service centre that is open seven days
a week, 24 hours a day. At the same time, the majority of Paytm's services are self-serve and
can be accessed directly via their websites.

Paytm's Value Proposition:

One of Paytm's more prominent propositions was its recharging market, which was the
company's original service proposition. Following that, the company proceeded to diversify
and progress, launching unique services such as Paytm-wallet, E-commerce, and Digital-
Gold. These efforts have earned the organization the blessings of Alibaba, a Chinese

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conglomerate that has contributed large amounts of money to the organization, thus
enhancing its investment potential. To hit more clients, Paytm used cricket and television
ads.

Paytm’ Channel:

Paytm attracts customers through a variety of networks. It has established relationships with
several client and vendor sites that sponsor its enterprise, in addition to its website that drives
clicks.

Paytm's Cost Structure:

Paytm services a large number of customers, which is why it is so low-cost. Its platform and
consumer acquisition account for the majority of its costs. It's a common expense faced by
many companies around the world where the cost of acquiring new customers is high [25].
The amount of money spent on this method is greater than the amount of money made on
the original transactions.

Apple Pay:

Apple pay is an Apple's solution for a digital wallet and mobile payment service using iOS
devices that allow the users to make payments in iOS apps, web and in person. It digitizes
and replaces the card (debit & credit) to store encrypted information about the payment in
order to enhance security and to generate a dynamic security code that is used in EMV-mode
is a magnetic strip-based data emulation method of transaction to include dynamic card
verification value (DCVV) during the transaction. EMV is a Europay, MasterCard, and
Visa, that was originally created by the three companies.

It is often called a Signature cards, PIN, a chip, that depends on the authentication methods
that are employed by the card issuer. It hides the track usage details between banks, the
vendors and the customers. It replaces the customer’s Permanent Account Number (PAN)
with a tokenized Device Account Number (TDAN) in order to hide the transaction details
from the retailer by using EMV-payment tokenization method. Apple pay request the user
to authenticate the device to proceed with the payment. It creates a unique value to check
the transaction is arrived from an authorized device. This distinctive identifier along with its
cryptogram and token (DAN) involves the transaction to authorize and it cannot be used

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from another device even if the token is stolen because the token must come from the
registered device.

The authentication includes PIN number and finger print identification method using sensor
(Touch ID). Finger print authentication provide security in case of stolen device that
enhances high level of customer satisfaction. Apple pay provides services that compatible
with the devices include 6 S plus, iPad pro, iPhone 6, and the Apple watch. Data integrity to
provide data integrity for existing records generated by a trusted device refers the data stored
in the database including metadata to track the origin of each unique customer data record.
The Meta data has an application identifier to identify which app is used to store the
customer data record. A digitally signed copy of the customer data record is available in the
possible metadata to ensure integrity of customer details during the transaction.

Data Security a Highly Secure Element (SE) is a secure chip available in Apple devices is a
tamper evident e.g., the device automatically blanks the memory to make sure that no keys
can be extracted if it detects any trial of reading its contents. The terminal converse directly
through the Near Field Communication (NFC) controller with the Secure Element over a
dedicated hardware bus and the payment authorization details are never exposed to the
application processor and it is localized to the local NFC field.

Google Wallet:

Google wallet stores the encrypted user data in the Secure Element as its trusted store of
sensitive payment information. The Secure Element (SE) chip is separate from the device
(phones) components like memory, hardware and operating system. It allows only trusted
programs to access the particulars like Google Wallet that is stored within. It is designed
mainly for the region of customer retail.

A user must unlock the phone, to enter the applications unique Personal Identification
number between the merchant by tapping the device against a compatible card reader during
the transaction. At last, the merchant receives a printed receipt with the confirmation on the
point of sales terminal in order to receive the confirmation in the user’s mobile device. Now
days Google using Host Card Emulation based payment credentials in which the data are
stored in the cloud. For transition from SE to HCE, Google focus on integration with other
apps, authentication process, and loyalty rewards. The wallet controller released the Wallet
app on a user’s device to store information in the timeline with contactless payment

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functionality and current state of the application. Authentication It offers a number of
authenticate methods to the customers before any payments.

It accepts PIN number, password and fingerprint authentication or a pattern to process the
transaction. The tokens are loaded into the device prior before made the payment. When the
connectivity is available then the tokens are sent by the Google server. Data Protection The
user’s data stored on any device is vulnerable (in case of stolen device or compromised
service by attack) it is essential to store the card sensitive data base in a secured cloud
environment. Finger print can validate the device profile tokens to reduce the risk by
replacing the PAN with limited data during the payment system. Security keys are limited
to prevent the misuse during transaction. It checks the transaction risk analysis. Data
integrity It is mandatory for the users to register about their cards (Credit /Debit) with
Android Pay. Android Pay (and Google) is free from the responsibility of identifying the
user to the customer’s bank. The card issuer provides a number of verification methods to
decide whether the user identity is verified.

1. The customer’s bank will send an email/text with a verification code to the user.

2. The customer could call the bank and request the verification code.

3. If the customer installed with the bank’s application on the mobile, it is possible to sign
in to verify the card to the app. This verification process will require a small charge. So, the
user needs to log on to the electronic banking system to provide the verification code.

The user enrolling a card on Android Pay needs to be aware that the card number is going
to be transmitted and stored in Google’s cloud server.

Free charge:

Free Charge, a leading digital payments system allows consumers to buy a Google Play
recharge code on its platforms. Customers use their Free Charge app to select the „Google
Play‟ option on the website, and enter their details like mobile number, desired amount,
make payment and receive a Google Play recharge code. Payment for these recharge codes
can be done using Free Charge for wallet balance, debit cards, credit cards, Net banking or
UPI. The recharge code can be converted instantly through the “Redeem Now” link on the
Google Play store. Consumers can change the recharge code on the Google Play Store and
at the time of requesting for the code by the user it is sent to the users registered email and

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through SMS on the mobile number registered by them. Free charge consumers will be able
to purchase digital content by topping up on the Google Play Store like movies, games,
eBooks, android paid apps and so on. The SMS and email notification is not highly secured
in sharing the device. To provide security then the user is continuously logged in and no
password is required for any transaction.

Free Charge never logs out the user automatically. It is not easy to find the logout option.
There is no session timeout in the app. It allows for auto login to the app. Transaction is not
password-protected. These shortcomings could allow fraudulent transactions to occur, if the
user is not careful. Unusual transaction patterns, though logged, are not detected and no
warning is provided to the user. Will be an issue in case of fraud transaction repudiations
Not linked to vendors, hence there is no concern of deducting money without explicit
consent. Each transaction is identified by a unique Transaction ID, which gives a sense of
transparency and accountability.

Transaction confirmation SMS & email are provided immediately in line with reliable
transaction procedures. The balance amount does not accurately reflect the available
transaction amount. Though the app explicitly requests for privileges, it does not allow
transactions without internet to access the phone, SMS and storage of user devices. The Free
Charge wallet balance displayed in the home page of a user did not represent the transferable
balance accurately. On clicking on it, a pop-up displayed that the amount was not usable
cash balance but voucher balance. Voucher balance is not transferable and usable only for
paying to certain third-party vendors like mobile recharge, flight ticket booking, etc.

However, the wallet balance display was misleading, giving a sense of available cash
balance. In the latest Android and iOS platforms, Free Charge allows users to explicitly
accept or deny access to privileges. However denying access to phone, SMS and storage
caused installation failure and did not allow the user to carry out any transaction.

Android Pay:

Android pay is a digital wallet to enable users to make payments with Android phones,
tablets or Apple watches and it is developed by Google. Android Pay uses near field
communication (NFC) to facilitating funds transfer, it allows to transmit card information
to the retailer. It replaces the card (credit / debit card), or magnetic stripe transaction to
upload the same in Android Pay wallet with point-of-sale terminals (POS). It provides two-

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step authentication method. The service allows Android devices to communicate with point
of sale (POS) systems wirelessly by using a near field communication (NFC) antenna, Host-
based card emulation (HCE), and Android's security. Security It locks with a new password
or wipe all the personal information and data for a stolen device. It is recommended to use
lock screen security. It waits for certain time to allow the user to unlock the device, if not it
arises some security issues to delete all the personal details from the device. It uses a virtual
account number to provide high-end security and easy to identify if suspicious activity
happens and lock the screen automatically. Android Pay is supported by standard
tokenization that will not be shared to the payment terminal during payment transaction via
Android Pay. It does not send the credit/debit card number with the payment to a merchant,
instead it generates a virtual account number to represent users account information to keep
privacy in customers information, by sending a one-time security code instead of card/user
details. It is available with Finger print identification in absence Android pay allows to
access with pass code.

Value of frauds vis-a-vis the digital payments transactions (cards and

internet banking)

Table no. 1.1

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1.6 The impact of the COVID-19 pandemic on payment behaviour:

The COVID-19 pandemic offers a unique opportunity to study to what extent an external
shock and accompanying measures by the government, banks and retailers can result in a
change in payment behaviour and payment preferences. There are some first studies that
point at mixed effects. Based on a yearly payment diary carried out in May 2020 in the
United States, Kim et al. (2020) find that, in general, participants hold more cash in their
wallet and as a store of value in their homes, compared to trends reported in the 2019 diary.

Moreover, approximately 20% of the participants have switched from making in-person
payments to paying online or over the phone. In a follow-up study Foster and Greene (2021)
show that far less US citizens reported making in-person payments in spring 2020 (34%)
than in fall 2019 (96%). Furthermore, those who made in-person payments, were about as
likely to use cash in spring 2020 as they had been in the fall of 2019. Of people who paid in
person at least once in the prior 30 days, 57% used cash at least once in October 2019, 59%
in spring 2020, and 72% in August 2020.

Studies covering other countries report a (sharp) increase of card usage at the expense of
cash and there are indications that part of these changes may be persistent. Chen et al. (2020)
shows some early survey evidence from spring 2020 that cash usage at the POS by Canadian
citizens has decreased at the expense of debit and credit card payments, but that the role of
cash as a store of value has somewhat increased. In particular, a third of the survey
respondents reported that they had decreased their use of cash in response to the pandemic.
Results from follow-up studies (Chen et al., 2021a, 2021b) indicate that part of these effects
were temporary.

Canadian citizens stated they made more usage of nearly all POS payment instruments, but
especially of cash in July 2020 – just after the easing of containment measures limiting in-
person payments in Canada – compared to April 2020. Furthermore, consumer cash
holdings returned to pre-pandemic levels. According to Gutmann et al. (2021) the COVID-
19 pandemic accelerated the trend decline in cash usage in Australia. Survey data suggest
that the shift away from daily cash use may become permanent for many people; two-third
of the people using less cash said they expected to continue to use less cash also after the
pandemic is over. The survey results are supported by the reduction in the volume and the
value of cash withdrawals at ATMs and a shift to online shopping, which have endured even

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after the easing of physical restrictions. For example, the share of online sales to total retail
sales had risen sharply from 6.5% in the second half of 2019 to 10% since March 2020.

There are also studies showing that the pandemic has accelerated the use of electronic
payment instruments in Europe. Four out of ten respondents of an ECB study carried out in
July 2020 say they use less cash since the beginning of the COVID-19 pandemic and a
majority of these people expect to continue this behaviour after the ending of the pandemic
(ECB, 2020). The fact that electronic payment instruments have been made more convenient
is the most often mentioned reason for the change in behaviour. Wisniewski et al. (2021)
examine the influence of the COVID-19 pandemic on payment behaviour in the EU, using
survey results collected in July and August 2020 of 5504 citizens from 22 European
countries. The usage of cashless payment instruments increased at the expense of cash,
because of the fear of getting infected by the virus by using cash. Moreover, their results
suggest that this change in behaviour may be persistent.

In addition, there are studies focusing on one particular European country. The first group
of studies uses survey data. Denmark’s National bank (2020) shows that contactless and
online payments quickly gained ground in Denmark while cash payments fell during the
lockdown. More specifically, 30% of the Danish respondents reported increased payment
card use relative to before the lockdown, and 41% reported less cash usage. The Danish
study also indicates that the use of cash gradually increased during the reopening of the
economy by the end of August 2020. In addition, online payments have returned to pre-
lockdown levels in Denmark.

Schweizer National bank (SNB) (2021) uses survey and payment diary data collected in fall
2020. Compared with the previous study held by SNB in 2017 the share of cash payments
in the number of non-recurring payments has dropped considerably from 70% in 2017 to
43% in 2020. Both improved appreciation of cashless payment instruments and the
pandemic triggered the increased usage of cashless payment instruments. For instance, 36%
of respondents state that they have made lasting changes to their payment behaviour as a
result of the pandemic. Within this group, most people state that they intend to pay more
frequently (contactless) by card, or to use less cash. This self-assessment is in line with the
observed partial recovery in cash withdrawals at ATMs in the summer of 2020, while card

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usage at the POS remained above pre-crisis level. Using survey and payment diary data
collected between August 18 and October 19 2020 Deutsche Bundesbank (2021) reports a
strong growth in the usage of cashless payment instruments by German consumers during
the pandemic. Compared to its previous payment survey covering 2017, the share of card
payments at the POS rose by 9 percentage points to 30%, while the share of cash payments
decreased from 74% to 60%.

It seems likely that part of the substitution of cash by (contactless) card payments was fuelled
by the pandemic. About half of the people who used contactless card payments for the first
time during the pandemic said this was because of better hygiene or signs in shops. For
Norway, Norge’s Bank (2021) finds that the share of cash in the total number of POS
payments dropped from 7% in fall 2019 to 3% in spring 2020. Although the cash share
partly recovered to 4% in autumn 2020, it went down again to 3% in spring 2021.

Studies on European countries that use card transaction data show a drop of card transactions
during the pandemic. In Minguzzite. (2020) information on the usage of cards as a means
of payment is used to estimate the drop in consumptive expenditures during the lockdown
in Spain. The study reports that immediately after the start of the full lockdown and the state
of alert was declared in Spain, payment card spending and ATM withdrawals saw a drastic
drop of around 50% (year-on-year). Payment card spending returned back to normal levels
by the end of June 2020, while ATM withdrawals remained well below 2019 levels. Online
purchases in Spain have shown a large increase. Bounie et al. (2020) investigate the impact
of the COVID-19 pandemic using detailed French consumer card transaction data covering
the period before and during the first year of the pandemic in France.

They find a strong decline in both the value (−54%) and the volume (−61%) of card
payments at the POS during the lockdown period in spring 2020, and a rise of 19% in the
average transaction value. These findings suggest that French consumers made fewer
shopping trips but larger purchases during the lockdown. The decline in POS expenditures
using cards was approximately twice as large as the decline in online expenditures.
However, online expenditures increased in some of the economic sectors for which home
delivery of goods was feasible. Using transaction data from Dutch customers of ABN
AMRO bank, Golec et al. (2020) attempt to separate the economic effects of voluntary

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responses to COVID-19 from those attributable to government lockdown measures. Their
findings suggest that in municipalities with higher levels of infections, the impact on
consumption is larger.3 For Switzerland, Kraenzlinetal. (2020) investigate the impact of the
pandemic on card usage in the Swiss retail sector using card transaction data covering the
year before the pandemic (January - May 2019) and the pandemic year 2020 (January –
May 2020). Apart from aggregate effects on retail spending, they provide evidence for
pronounced regional shifts – which persist post-lockdown – based on retail card payment
spending across areas with different levels of urbanization and across the Swiss cantons. E-
commerce and cash substitution are identified as main drivers.

To summarise, there is compelling evidence that the pandemic has affected payment
patterns in various countries around the globe. However, the extent and duration vary a lot
across countries. Moreover, in some countries the shifts in payment patterns were
temporary, whereas in other countries, like Australia, Norway and Switzerland, they are
expected to persist longer.

A key advantage of our payment diary data set compared to survey data used in other studies
is that we use a continuous daily series covering both the pre-COVID-19 period and the
COVID-19 period. Moreover, we have detailed information on the transactions and
respondents. Our main value added, in contrast to studies that use card transaction data,
derives from the fact that we use information on both electronic and cash payments, joint
with information on payment preferences.

1.7 TYPES OF E-FRAUDS:

In order to assess the risks of and combat payment fraud there should be an understanding
of its many facets. E-payment frauds have a multiplicity of types and there is no exact
number or fixed list of these types. Frauds are classified as online fraud and offline frauds.
Online frauds occur when fraudster possess legitimate company to obtain sensitive personal
information and illegally conduct transactions in the existing accounts. Phishing and
spoofing are examples of online frauds.

Online frauds occur when fraudster steals personal information such as credit number, bank
account number or other identification and uses it repeatedly to open new account or pledges
transaction in the real individual/company’s name. Offline fraud includes credit card fraud,

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phone solicitations, print fraud, check scams and mail fraud. Department of Justice (DOJ)
U.S has divided frauds (computer fraud) into three categories:

1) crimes in which computer hardware, peripherals, and software are the target of a crime;
where in the fraudster obtains objects illegally:

2) crimes in which the computer is the immediate subject of a crime, that is the attacks is on
a computer or a system, destruction or disrupting of which is the damage caused; and

3) crimes in which computers and related systems are the means or "instrument" by which
ordinary crimes are committed, such as theft of identities, data, or money or the distribution
of child pornography. There are different types of e-fraud and all of these attack in a slightly
different way. Fraud can occur in a number of ways as listed below.

Account Hacking:

Hacking includes gaining illegal entry into a person computer (PC) system. Fraudster use
compromised customer credentials to hijack the origination system and use it in the lawful
account holder’s name. Corporation are also targeted and also seen on a rise. Attacks are
aimed

Identity theft:

Fraudsters acquire users' personal information (e.g. PAN/Aadhaar details or social media
credentials) or critical information about their bank accounts in order to gain access and
initiate online payments or open a payment account to execute transactions. Personal data
of customers is made available on the dark web, enabling fraudsters to carry out this type of
fraud. There have been multiple incidents in India involving banks, payments banks and
other Fin Techs wherein the victims of identity theft have reported that their personal details
were used by fraudsters to perform fraudulent transactions, including availing of credit card
facility from banks. Fraudsters may also impersonate an authorised official (bank employee,
police, Government official, health official, etc.) or the user's trusted acquaintance, and
manipulate the user into transferring money.

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Phishing:

Phishing is a well-known technique for obtaining confidential information from a user by

posing as a trusted authoring. Phishing is an attempt by fraudster to „fish‟ for your baking
details through emails with attachment or hyperlinks. The e-mail appears to be sent from
legitimate organization to trick people in order to reveal sensitive information. On clicking
the attachment or the hyperlink the computer system gets infected with malware. During the
next online transaction, the malware will activate and steal private and personal financial
information, including credit card numbers, PIN number which is used by fraudster to steal
money from the account. Malware or „Malicious Software‟ is software which includes
computer viruses, worms, Trojan Horses, spyware and other malicious software.

Spoofing or Website cloning:

This is an act of creating a hoax web site or to say duplication of a website for criminal use.
The fraudsters use legitimate companies name, logos, graphics and even code. This usually
take form of know chat room or trade sites where in people would innocently giving out
personal information to criminals or make a fake purchase of a product the does not exist.

Internet Gambling (Virtual casinos):

The Internet has made certain types of gambling possible. A person in India or China from
his home can participate in internet poker game in Caribbean over the Internet. CERT-
LEXSI (2006) as cited by McAfee (2009) there are around 15000 active online gambling
sites in 2006 out of which 1766 operate on license. Although there are operating online
casinos in an honest manner, the potential for fraud connected with casinos and
bookmarking operations is far greater. Online gambling establishment appear and disappear
with regularity, collecting from losers and not paying winners without any fear of being
appended and prosecuted.

Nigerian advance fee fraud “(419 fraud)”:

This e-fraud is the most popular and lucrative fraud, which is named after the section of
Nigerian law that covers it “419”. The hoax often arrives with bulk mailing or family

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member email of asking the recipients to enter into business and getting money transferred
with huge commission in return. Once the contact is established the fraudsters request
money in advance which need opening of an account in the bank or paying some fee which
leads to troubles and expenses.

ACH Frauds:

Automated Clearing House (ACH) Fraud is basically information fraud. With the
increase in ACH transactions for corporate payments obviously there is increase in the
ACH frauds. The fraudsters access the account information and route number
illegitimately to steal funds directly from accounts. Government payment, payroll and
other online payment face these frauds. In the year 2011, 17% of the organizations that
are victims of fraud, suffered financial loss (AFP 2012)

Lottery frauds:

One will receive scam emails informing of winning a substantial amount of money in
a lottery draw. When the receiver reply’s, the sender then asks for bank account details
and other personal information so they can transfer the money. These emails are fake
and may ask to pay a handling feel that will lead to loss of money and your personal
information which may be used in other fraud.

Cryptocurrency frauds:

With the increasing public interest around cryptocurrencies, it is only expected that this
currency will also be susceptible to malicious attacks and be exploited by attackers and
cybercriminals. According to a report released by the Federal Trade Commission (FTC)
consumer sentinel scams in crypto are seeing an exponential rise in the United States,
with losses of around USD 80 million from Oct 2020—Mar 2021, which is ten times
that of the previous year. The most common and emerging cryptocurrency frauds can
be classified as below:

a. Investment scams:
With little knowledge of the digital currency market, users or investors are
easily tricked into believing the authenticity of a cryptocurrency. New types of

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 coins are introduced every day and released in the market as an initial coin
offering (ICO). Fraudsters are creating fake websites that draw investors in
these currencies with the promise of substantial returns. As more and more
investments come in — inflating the value of the currency — the initial
investors pull out their holdings in an act frequently termed as a ‘rug pull’. Once
the scammer's money has been pulled out, the platform is taken down, leaving
investors with no option to sell their assets.

b. Wallet scams:
There are two types of wallets in the crypto world, commonly distinguished by
the mode of storage of the currency — online or offline. These are known as hot
and cold wallets respectively. Hot wallets are susceptible to potential phishing
scams, whereas cold wallets are susceptible to loss of currency when the storage
device is lost or the passkey to access it is forgotten.

Frauds with the advent of 5G technology:

In terms of future technologies, incorporating 5G technology into the payment’s

ecosystem will lead to faster payments. However, it may also present a larger attack
surface to fraudsters. The ability of FLs to scale up fraud prevention and detection also
be tested. In June 2022,7 the Indian Government Union Cabinet claimed that the 5G
network will provide speed and capacity that would be 10 times higher than that of 4G.
As a result, the traditional fraud-identification measures will not be sufficient to combat
5G-initiated frauds. The number of devices with a single credential, speed and low
latency of 5G technology will require more advanced methods of fraud detection in
order to mitigate and prevent attacks.

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1.8 MEASURES FOR FRAUD PREVENTION AND DETECTION:

With the increase in e-commerce sales the merchants face challenges to reduce frauds
in e-payment transactions. E-frauds start with diversion of personal information. A
poorly protected computer, a trash or recycling bin, an email message or chat on internet
exposes to fraud. For the merchants the majority of fraud loss is due to consumer’s
claim of fraudulent account used and/or subsequent information from additional orders
placed by fraudster. Fraud has become the persistent threat to merchants in e-payment
transactions in e-business. It is impossible to totally eliminate the chance of fraud but
timely measures taken can reduce the frauds. The merchant and the financial Institution
take the necessary measures in combating fraud effectively. Fraud prevention involves
taking measures to stop fraud from occurring and while fraud prevention fails then the
merchant takes steps to detect the frauds quickly and stop it as soon as possible. Fraud
prevention and detection involves planning, detecting and avoiding risk. Frauds can be
controlled by monitoring the internet threats, understanding the customer and
implementing security measures. Different techniques are required as there are different
types of fraud in e-payment transactions.

Fraud Detection Tools:

Fraud detection tools are those that are used to assess the probability of frauds in payment
transactions. Cyber source 2012 shows that 56% of merchants surveyed utilize an automated
screening system. Every merchant doing e-business should be aware that frauds cannot be
totally eliminated but can be controlled with protective measures. Some of these measures
are to counter internal threats and some are to stop external threats. Some are relatively
inexpensive while others are expensive involving huge amount of money. The anti-fraud
tool is required to detect frauds accurately and in time, automate processes when required,
adapt to changing patterns of fraud and behaviour of customers. Some of the Anti-fraud
tools are include

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1.Universal Payment Identification Code (UPIC):

A UPIC is a unique account identifier that issued by financial Institution is developed by

Electronic Payment Network (EPN). This will allow merchants doing e-business to receive
e-payment without disclosing confidential banking information.

2.ACH Block (Automated Clearing House):

This can place a „block‟ preventing ACH activity when the merchant account is
unauthorized for ACH transaction. The merchant can receive alert from the bank to ACH
transactions that don’t meet predefined conditions and then take decision whether to accept
or decline the transaction. This enables the merchant to stop e-fraud before it happens.

3.Fraud Detection Software/tools:

The organization doing e-business should install fraud detection software/tools that can
detect fraud and to reduce fraud rates. The software will give fraud results and the merchant
will be able to take decision whether to accept, reject or review the transaction. There are
different categories of fraud detection tools which are grouped into validation service,
proprietary data, purchase device tracing and multi-merchant data. Some of the tools are
AVS – Address Verification Service, CVC – Card Verification Code and Risk Management
Modules or Fraud Screens. According to CyberSource (2012), 56% of the merchants‟
survey made use of these tools.

4.IP Address Locator:

It provides the merchant the data on user’s exact location and displays its origin on a
map, giving approximately the city and state. It also calculates the distance between the
billing address of online buyer and actual location of persons entering the orders. This
is not a fool proof that visitor is using a proxy; however, the merchants can apply
authentication measures for transaction wherein there is a great difference in distance
and take decision on which transaction to review and which to allow. There should a
check to if any users are using anonymous proxy servers to hide their IP address, which
can be done by obtaining a list of anonymous proxy server.

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1.9 Security in e-payment process:

Secured e-payment transaction system is critical to e-business. Without a secured payment

transaction system, e-commerce will be a castle build in the sand. There are two commonly
used secure e-payments Secured Socket Layer (SSL) and Secured Electronic Transaction
(SET). SSL is a secured connection for cyber shoppers to send payment information to e-
tailor’s web. The objective of SSL is to ensure confidentiality, by encrypting the data that
moves the client and server computers when exchanging information. It also provides
authentication by use of RSA algorithm. SSL provides a secured connections for payment
for merchants and customers. SET is a messaging protocol designed by VISA and
MasterCard for securing credit card transaction over open network. The main feature of SET
protocol is that all sensitive information sent to all parties (customer, merchant and Bank)
are encrypted, all three parties are required to authenticate with certificates from SET
certificate authority and the merchant never sees the customer card number in plain text.
SET ensure that payment process is private, convenient and secured. It allows customer do
internet transaction at ease as it is easy and simple; and also, without any fear.

1.10 Awareness and Education:

Awareness of security risks by merchants and consumers plays an important role in reducing
fraud in e-payments Merchants awareness and education is also important. They should be
aware of the types of frauds, statistic and best practices. Consumer awareness and education
is important in order to reduce Identity theft or payment data theft. This would help the user
in adopting active and cautious attitude when doing transaction using internet. It could teach
them to be aware of possible risks, avoid e-scams, and minimize giving information to
merchants when buying online. This would increase consumers‟ responsibility in keeping
personal data secured in physical and virtual world.

1.11 Protection from Internal Threats:

Organizations should take measures to minimize internal tampering with the computer
system. The Management should take precautionary measures which include
monitoring the use of computers and network by employees. The physical access to

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computer should be limited by use of passwords, magnetic card reader and biometrics
to verify the identity of the user. Management should stress the importance of keeping
the password confidential to employees. There should be responsibility for custody,
safeguarding and limiting access to computers. Fraud prevention not only saves money
but also cost money. In Fraud prevention organizations have to be highly cautious as
false rejection of non-fraudulent transaction will cost the company. At times, in spite of
using technology tools in detection of fraud, fraud prevention involves manual
procession of the transaction. Different techniques may be needed for different kind of
fraud. The organization should formulate successful strategy for detecting and
preventing fraud and thereby eliminating fraud losses.

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 CHAPTER 2

REVIEW OF LITERATURE

Electronic banking fraud characteristics:

From a system point of view, the essence of electronic fraud reflects the synthetic abuse
of interaction between resources in three worlds: the fraudster’s intelligence abuse in
the social world, the abuse of web technology and Internet banking resources in the
cyber world, and the abuse of trading tools and resources in the physical world. A close
investigation of the characteristics is important for developing effective solutions,
which will then be helpful for other problem-solving. (Sahin, Y., and Duman, E. 2011)

Investigations based on literature review shows that real-world electronic banking

transaction data sets and most electronic banking fraud has the following characteristics
and challenges:

(1) highly imbalanced large data set.

(2) real time detection

(3) dynamic fraud behaviour.

(4) weak forensic evidence.

(5) diverse genuine behaviour patterns.

The data set is large and highly imbalanced. According to a study on one Australian
bank’s electronic banking data, electronic banking fraud detection involves a large
number of transactions, usually millions. However, the number of daily frauds is
usually very small. For instance, there were only 5 frauds among more than 300,000
transactions on one day. These results in the task of detecting very rare fraud dispersed
among a massive number of genuine transactions.

According to Linda D., Hussein A., John P., (2009), In Electronic banking, the interval
between a customer making a payment and the payment being transferred to its
destination account is usually very short. To prevent instant money loss, a fraud

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detection alert should be generated as quickly as possible. This requires a high level of
efficiency in detecting fraud in large and imbalanced data. The fraud behaviour is
dynamic.

According to Masoumeh Zareapoor, Fraudsters continually advance their techniques to

defeat electronic banking defences. Malware, which accounts for the greater part of
electronic banking fraud, has been reported to have over 55,000new malicious
programs every day. This puts fraud detection in the position of having to defend against
an ever-growing set of attacks. This is far beyond the capability of any single fraud
detection model, and requires the adaptive capability of models and the possibility of
engaging multiple models for leveraging the challenges that cannot be handled by any
single model. (Seeja.K. R, and M. Afshar. Ala, 2012)

The forensic evidence for fraud detection is weak.

For Electronic banking transactions, itis only possible to know source accounts,
destination currency value associated with each transaction, but other external
information, for example, the purpose of the spending, is not available. Moreover, with
the exception of ID theft, most electronic banking fraud is not caused by the hijack of
an electronic banking system but by attacks on customers’ computers. In fraud
detection, only the electronic banking activities recorded in banking systems can be
accessed not the whole compromise process and solid forensic evidence (including
labels showing whether a transaction is fraudulent) which could be very useful for
understanding nature of the deception. This makes it challenging to identify
sophisticated fraud with very limited information. (Adnan M. Al-Khatib, 2012)

Kartikeya Bolar (2014)

In his research paper “End-user Acceptance of Technology Interface in Transaction
Based Environment “stated that Creator sand investors of technology need information
about the customers‟ evaluation of their technology interface based on the features and
various quality dimensions to make strategic decisions in improving technology
interfaces and compete on various quality dimensions.

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The Electronic banking system is fixed.

The Electronic banking process and system of any bank are fixed. Every customer
access the same banking system and can only use the services in a predefined way. This
leads to good references for characterizing common genuine behaviour sequences, and
for identifying tiny suspicions in fraudulent electronic banking.
The above characteristics make it very difficult to detect electronic banking fraud, and
electronic banking fraud detection presents several major challenges to the research,
especially for the mainstream data mining community: extremely imbalanced data, big
data, model efficiency in dealing with complex data, dynamic data mining, pattern
mining with limited or no labels, and discriminate analysis of data without clear
differentiation. In addition, it is very challenging to develop a single model to tackle all
of the above aspects, which greatly challenge the existing work in fraud detection.
(Tung-shou Chen, 2006)

Miss. R. Elavarasi

in her study on Customer Awareness and Preference towards E-Banking Services of

Banks studies about way us to customer awareness & to find out what they most
preferred e-banking services of banks. The researcher has identified which commercial
bank provides better service with regards to e-banking services to customers and also
identified satisfaction level of customer view about internet banking website of banks.
The data analysis shows that age, educational qualification, occupation, income level
of customer are significant factor that decide usage of e-banking services of various
banks in the study area.

ANUSHU PREMCHAND (2015)

In the modern society, no economic activity is possible without payments and
settlements. In this sense, it could probably be said that payment systems are one of the
most imperative and significant social infrastructures that we have. e-Payments are an
increasingly important part of payment systems. They allow for quick international
connectivity in the payment’s world. e-Payment can be looked as a panacea for most
ills in payment world, if not all.

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financial inclusivity for unbanked, fast across the world transactions, safety and security
of payments and cost savings over traditional payment systems. In this paper, we look
at e-Payments, what they entail and basic payments infrastructure. We also look at the
future of e-Payments as well as challenges and recommendations for e-Payment
systems of tomorrow. In the next paper we will deep dive into the recommendations
for-Payments. Keyword Payments, Banking, E-Payments, bit coin, mobile payments,
digital wallet payments, biometric payments, financial service kiosks, NFC, financial
inclusion.

Sanghita Roy, Dr. Indrajit Sinha (2014)

stated that E- payment system in India, has shown tremendous growth, but still there
has lot to be done to increase its usage. Still 90% of the transactions are cash based.
Technology Acceptance Model used for the purpose of study. They found Innovation,
incentive, customer convenience and legal framework are the four factors which
contribute to strengthen the E- payment system.

Deepak Mathur (2017)

E-commerce provides the capability of buying and selling products, information and
services on the Internet. In an ecommerce environment, payments take the form of
money exchange in an electronic form, and are therefore called Electronic Payment. E-
Payment system is secure, there should be no threat to the user credit card number,
smart card or other personal detail, payment can be carried out without involvement of
third party, it makes E payment at any time through the internet directly to the transfer
settlement and form E-business environment.

STATE BANK OF INDIA, (2012)

State Bank of India has initiated a new electronic payment service called the SBI Direct;
this facility brings all the operations and transactions of the bank under the mobile
banking facility. According to State Bank of India, this facility allows its customers
access to their accounts any time and provides all the banking facilities with more
facilities being added, available to its customers any time of the day.

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Nitsure (2014)
in his paper observed that the problem being faced by developing countries like India
in the adoption of E-banking initiatives due to low dissemination of Information
Technology. The paper highlighted the problems such as security concerns, rules,
regulation and management. In India there isa major risk of the emergence of a digital
split as the poor are excluded from the internet and so from the financial system.

BERGER, ALLEN N, (2003)

Electronic commerce can be described as any kind of commercial transactions that
comprise of exchange of information on the internet. Organizations engaged in e-
commerce exchange information related to their business through different means of
electronic mediums like internet, telephones and other information facilities. Electronic
payment thus can be seen as a part of electronic commerce that offers products and
services like account information, payment options, transfer of funds and opening and
closing of accounts and other banking services.

Slozko & Pello, (2015)

E-payment systems are important mechanisms used by individual and organizations as
a secured and convenient way of making payments over the internet and at the same
time a gateway to technological advancement in the field of world economy.

Rakesh H M & Ramya T J (2014)

in their research paper titled “A Study on Factors Influencing Consumer Adoption of
Internet Banking in India” tried to examine the factors that influence internet banking
adoption. It is found that internet banking is influenced by its perceived reliability,
Perceived ease of use and Perceived usefulness. In the process of internet banking
services expert should emphasize the benefits its adoption provides and awareness can
also
be improved to attract consumers‟ attention to internet banking services.

AASTHAGUPTA (2013)
describes that RBI played a significant role in developing the payment system in the
nation through its establishment. ATM also provide better alternative to traditional

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payment system. RBI also enhance the payment system by introducing MICR, RTGS,
Card based clearing etc.

Rachna (2013)
describes that electronic payment system is the basis of on-line payments
and it make electronic payment at any time through the internet directly to
manage the e -business environment. The risk to the on-line payments are
theft of payments data personal data and fraudulent rejection on the part of
customer.

General work in fraud detection:

Many statistic and machine learning techniques have been developed for tackling fraud
for example, Neural Network, Decision Tree, Logistic Regression and Rule-based
Expert Systems. They have been used to detect abnormal activities and for fraud
detection in many fields, such as money laundering, credit card fraud, computer
intrusion, and so on. They can be categorized as unsupervised approaches and
supervised ones. Unsupervised approaches, such as hidden Markov Model, are mainly
used in outlier detection and spike detection when the training samples are unlabelled.
Based on historical data and domain knowledge, electronic banking can collect clearly
labelled data samples for the reports from victims or related crime control
organizations. Unsupervised approaches cannot use such label information, and the
accuracy is lower than that of supervised approaches. Some supervised methods, such
as Neural Network and Random Forests, perform well in many classification
applications, including fraud detection applications, even in certain class-imbalanced
scenarios. However, they either cannot tackle extremely imbalanced data, or are not
capable of dealing with comprehensive complexities as shown in the electronic banking
data and business.

(Philip K. Chan, Wei Fan, Andreas L., 1999)

Understanding the complexities of contrast between fraudulent behaviour and
genuine behaviour can also provide essential patterns which, when incorporated in a
classifier, lead to high accuracy and predictive power. Such understanding triggers the

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emergence of contrast pattern mining, such as emerging pattern, jumping emerging
patterns, and mining contrast sets. However, various research works show that these
approaches are not efficient for detecting rare fraud among an extremely large number
of genuine transactions.

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 CHAPTER-3

RESEARCH METHODOLOGY

3.1 Research statement:

ELECTRONIC PAYMENT FRAUD

To study electronic payment fraud faced by consumers.

3.2 Objective of the study:

1. To study factors leading to electronic payment fraud.

2. To study reasons behind usage of electronic payment model.
3. To study various electronic payment models used by consumers.
4. To analyse impact of electronic payment fraud on usage of electronic payment
model.

3.3 Scope of study:

Payment fraud protection: How to detect payment fraud:

With how fast payment fraud evolves, it can be difficult for businesses to be as
educated—and prepared—as possible to fight it. That’s why having effective strategies
to prevent online payment fraud in place is so vital for businesses. Rather than be
reactive, it is important businesses take a proactive stance and identify suspicious
behaviour and patterns, in as close to real-time as possible.

Learn to spot what payment fraud looks like:

It’s one thing to be familiar with the kinds of check and digital payment fraud we
mentioned earlier. To actively detect whether a fraudulent scheme is at play, you’ll
want to be on the lookout for a few telling indicators. Here are some of the most
common signs of payment fraud:

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1. Falsified or inconsistent information:
Be on the lookout for buyers transacting using false information—such as phone
numbers and email addresses. In many cases the information might appear to be
accurate, but if there are inconsistencies—such as the same email address but
different names used across multiple purchases—that’s a red flag.

2. Abnormal or canned communications:

Fraudsters look to target as many businesses as they can in as little time as possible. To
expedite the process, they often use canned or scripted responses. If communication
with a prospective customer seems stiff or off or abnormal in any way, it might signal
the start of a fraudulent attack.

3. Unusually large orders:

You likely have a general sense of what products sell when, and in what quantities. Be
aware if you suddenly begin receiving unusually large orders (comprised of multiple
high-value goods) and are unable to pinpoint to a reasonable cause.

4. Atypical requests:
Identifying fraud unfortunately requires a fair amount of qualitative analysis.
Listening to your gut feeling is important. If you notice some unusual requests
are being made, this could be a sign of fraudulent activity. For example, you
might receive requests to:

 Split a large order into multiple payments across different cards with
different billing addresses.

 Process a payment manually to overcharge a card and pay the difference

to a third-party, or

 Provide a refund outside the card network from which the charge
originated—such as via check or ACH.

These might all be indicators of fraudulent behaviour.

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Implement payment fraud detection methods (that simultaneously
improve CX)

Given the ramifications of payment fraud—or of being the recipient of fraudulent

activity—businesses tend to treat payment fraud prevention as an exercise in risk
management.

Unfortunately, this often impedes customer experience. It’s important you blend your
payment fraud prevention tactics into your payment acceptance and processing
workflows seamlessly, so that your customers’ payments are secure and their payment
experience as a whole is enjoyable and memorable—for the right reasons; not for the
unnecessary friction that’s often imposed on them.

Table no. 3.1

FRAUD
DETCTION HOW TO BOOST CX
METHOD

Helps users authenticate payments through their bank.

3D Secure

Limits malicious bot traffic, letting users know security

Re-captcha systems are in place for that contingency.

Secure payment Centralizes all account and invoice information, and

portals payment methods. Offers transparency into payment
statuses and establishes easy communication between
stakeholders, limiting disputes.

transaction
analytics Proactively identifies potential for payment fraud.
Unobtrusively protects users, enhancing CX.

Payment Protects users’ payment information while enabling faster

tokenization checkout.

36 | P a g e
Payment fraud prevention tactics can actually improve customer
experience while minimizing payment fraud risk—here’s a sampling
of how:

There are further payment fraud protection and best practices for online payment fraud
prevention—and anti-fraud controls businesses can action—including:

1. Monitor, prevent, and block incoming fraudulent activity

2. Make compliance a year-round priority
3. Align your finance and IT divisions

1. Monitor, prevent, and block incoming fraudulent activity:

One of the most important things you can do to prevent payment fraud is establish
processes and tools that enable you to stop fraudulent activity early—not just merely
detect it. With digital payments—specifically credit cards—the critical window to
mitigate fraudulent activity is before authorization occurs—here, fees are still incurred
even if a transaction is not approved.

One such tool that can help mitigate fraud is the use of CAPTCHAs. These are systems
that help web hosts understand if humans or robots are accessing a website. They are
unobtrusive safeguards that protect websites from spam and abuse. A common practice
among fraudsters is card testing, which involves using automated scripts to run high
volumes of authorization tests on illegally obtained credit cards. CAPTCHAs can block
these mass tests.

“A little bit of friction—like having to engage a CAPTCHA—tells buyers that

merchants actually care about the security of their credit card data” — Chris Wassenaar,
Chief Risk Officer, Versapay

“Fraudsters are creatively identifying and capitalizing on vulnerabilities within

shopping carts and API-related connections so having CAPTCHA-related functionality
as well as monitoring and ensuring appropriate PCI compliance with all forms of
payment-related processing connectors is strongly encouraged” — Brandy Luczywo,
Interchange Analyst, Versapay

37 | P a g e
2. Make compliance a year-round priority:

While adhering to PCI compliance guidelines is necessary for businesses that handle
credit card information, being PCI-compliant does not guarantee your business will not
fall victim to a data breach or payment fraud.

There is, however, a noticeable trend of businesses being non-compliant at the time of
experiencing a data breach. According to Verizon’s 2020 Payment Security Report, of
the companies that experienced a breach between 2014 and 2019, 53% were confirmed
to be non-compliant. A remarkable 0% of PCI compliant companies surveyed
experienced a breach. It’s important to view PCI compliance as a continuous effort that
goes beyond the time of your annual certification.

3. Align your finance and IT divisions:

Efficient collaboration between your finance and IT teams is critical to preventing

payment fraud—and boosting payment security. Unfortunately, there’s a tangible
disconnect between the two parties, reducing how payment security is prioritized at
most organizations. We set out to examine the extent of this disconnect, and what we
found is significant. In surveying 500 finance and IT leaders—to better understand their
perception of how important collaboration between the CFO and CIO is—we learned
that 60% of respondents only bring their IT leader up to speed on transformation
projects after the project's been kicked off (and then, only as a formality). This lack of
collaboration has serious consequences for payment security. For example, the
disconnect leads to IT being unaware of broader business goals and finance being
unaware of the digital risks the company might face. As a result, payment applications
go live with significant flaws, posing potential payment fraud—and customer
experience—risks.

Sources of data:

There are two sources from data can be collected

Primary & secondary data

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Primary data:
The researcher has collected the data using structured questionnaire

In questionnaire method there are certain sets of questions which the respondents have
to answer. The effectiveness of the questionnaire totally depends on the sincerity and
dependability of the respondents. There are several ways in which the questionnaire can
be presented like open ended and closed ended. A good questionnaire should have at
least 10-12 questions in which 5-9 should be closed ended or multiple-choice questions
and 2-3 should be open ended questions. The questionnaire is mainly used for a sample
size population in order to get accurate, efficient and effective results. The questionnaire
is made according to the structured format. The response to the questionnaire can be
collected from the many ways like mail questionnaire telephonic questionnaire.

The secondary source is collected from the information that is available from the study
of the past researchers. The secondary data source includes sources like guidelines of
e-payment, from the annual reports of Reserve bank of India.

Secondary data:
The researcher has collected data from articles, research papers, thesis.

The secondary data comprises of that data which the researcher acquires from the
sources like magazines journals, annual reports of the company etc. basically it is that
data which is already available in several different resources. In the present research
the researcher has used both the primary data and secondary data. The techniques that
the researcher has used in collecting primary data are a questionnaire and interviews.
The secondary data in the topic include the annual report of the Union Bank of India.
The questionnaire consists of questions which are both close ended as well as open
ended. The respondents were insured that their identities would not bed is closed so as
to make sure that they provide genuine responses and do not hide any facts.

QUALITATIVE RESEARCH:

Qualitative research provides a deep insight into the behaviour of people towards any
process and activity and the reasons that forces this kind of attitude.

39 | P a g e
Hence, Qualitative research helps to understand the reasons behind these issues and has
been also been conducted in this project.

3.4 Sample size:

Sample size can be defined as the total number of respondents that is to be taken from
the population. In this research, 70 respondents were taken from Public.

3.5 Data analysis Tools:

There are different kinds of tools used to analyse the data for research project such as
charts, tables, diagrams etc. Here we have used the following tools in this project: -

1. Column Chart, Bar Chart

2. Pie Chart
3. Survey
4. Diagrams

3.6 Limitations of study:

The research was carried based on primary and secondary data. The primary data for
research objectives was collected from the samples based in India. Though South India
is one of the most significant cities of the country. However, the objective of the survey
was to verify the customers perceptions on digital payments with regard to the concept
of general banking. Since the study is about current scenario, results cannot be extended
for future developments in E-Payments. So, the limitation is that only 3 years of data
will be used.

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 CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

Introduction:

Data analysis and interpretation are crucial components of any research project. They
involve the systematic examination and evaluation of data collected from a study to
draw meaningful conclusions and insights. In this section of the project, we will explore
the various techniques used in data analysis and interpretation.

The primary objective of data analysis is to identify patterns, relationships, and trends
within the collected data. It is the process of transforming raw data into meaningful
information that can be used to answer research questions or test hypotheses. This
section will cover the different approaches to data analysis, including descriptive
statistics, inferential statistics, and data visualization

Once the data has been analysed, the next step is data interpretation. This involves
making sense of the analysed data and drawing conclusions based on the findings. In
this section, we will explore the different techniques used in data interpretation,
including thematic analysis, content analysis, and discourse analysis.

In summary, this section of the project will provide an overview of the different
approaches and techniques used in data analysis and interpretation. We will explore the
different software tools, statistical methods, and data visualization techniques used to
analyse and interpret data. By the end of this section, you will have a comprehensive
understanding of how to analyse and interpret data and draw meaningful conclusions
from research findings

Data interpretation:
The increasing prevalence of e-commerce has led to a growing dependence on online
payment systems as the demand for secure, efficient, and convenient payment options
continues to rise, it is important to understand consumer perceptions and behaviours

41 | P a g e
towards these systems. In this data analysis section, we will present the results of an
online survey conducted to explore the attitudes and experiences of 70 respondents
towards online payment systems. The findings will provide valuable insights into the
current state of online payment systems and inform future strategies for enhancing their
adoption and usage.

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 AGE No. of respondents Percentage
Below 25 42 60%
26-35 14 20%
36-45 6 8.6%
46-55 6 8.6%
56 & above 2 2.8%
Total 70 100%
Table no. 4.1

46-55 56 & above

8.6% 2.9%
36-45
8.6%

26-35 Below 25
20.0% 60.0%

Below 25 26-35 36-45 46-55 56 & above

This suggests that a significant majority of the respondents are below 25 years old. The
data could be useful for understanding the demographic of a certain group or for market
research purposes. Please note that the specific context or purpose of this data isn’t
provided in the image. For a more detailed and accurate analysis, a more comprehensive
study may be needed.

43 | P a g e
 Gender No. of respondents Percentage
Male 26 37.1%
Female 43 61.4%
Prefer not to say 1 1.4%
Total 70 100%
Table no. 4.2

Prefer not to say

1.4%

Male
37.1%

Female
61.4%

Male Female Prefer not to say

This suggests that a significant majority of the respondents are female. However,
without additional context or information, it’s difficult to provide a more detailed
analysis or interpretation. Factors such as the respondents’ demographic characteristics,
the specific context of the survey, and the reasons for the gender distribution would be
useful for a more comprehensive understanding of these results.

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 Qualifaction No. of respondents Percentage
SSC 2 2.9%
HSC 11 15.7%
Student 18 25.7%
Graduate 14 41.4%
Other 8 11.4%
Post graduate 2 2.9%
Total 70 100%
Table no. 4.3

Post graduate SSC

Other HSC
2.9% 2.9%
11.4% 15.7%

Student
Graduate 25.7%
41.4%

SSC HSC Student Graduate Other Post graduate

The most common qualification among the respondents is Graduate with 29

respondents. This means that the majority of the respondents have completed a graduate
degree. The second most common qualification is Student, indicating that a significant
number of respondents are currently pursuing their studies. The least common
qualifications are Post Graduate and SSC, each with only 2 respondents.

45 | P a g e
 Use of electronic No. of respondents Percentage
payment
Yes 58 82.9%
No 12 17.1%
Total 70 100%
Table no. 4.4

No
17.1%

Yes
82.9%

Yes No

The above pai diagram shows that among the respondents 82.9% people are using are
using electronic payment mode for buying in day-to-day life and around 17.1% of
people don’t use electronic payment

46 | P a g e
 Fund Transfer No. of respondents Percentage
method
G-pay 53 75.7%
Phone pay 16 22.9%
BHIM 6 8.6%
Paytm 11 15.7%
Other 8 11.4%
Total 70 100%
Table no. 4.5

60 80.0%
75.7%
70.0%
50 53
60.0%
40
50.0%

30 40.0%

30.0%
20
22.9%
15.7% 20.0%
10 16 8.6% 11.4%
11 10.0%
6 8
0 0.0%
G-pay Phone pay BHIM Paytm Other

No. of respondents Percentage

It appears that most respondents have used electronic payment methods, with a few
exceptions.
This data suggests that among the respondents, G-pay is the most popular electronic
payment method, and the majority of respondents have a Graduate degree. Please let
me know if you need further analysis or have any other questions!

47 | P a g e
 Victims of fraud No. of respondents Percentage
Yes 20 65.7%
No 46 28.6%
Maybe 4 5.7%
Total 70 100%
Table no. 4.6

Maybe
5.7%
Yes
28.6%

No
65.7%

Yes No Maybe

The above chart represents that majority of respondents have never been a victim of
electronic payment fraud i.e. around 46 or 65.7% people have never been a victim of
fraud and on the other hand 20 people or 28.6% people have been victim of the fraud.

48 | P a g e
 Mode of fraud No. of respondents Percentage
transfer
Credit card 4 5.7%
Debit card 7 10%
Mobile-wallet {G- 18 35.7%
pay, phone, Etc}
Online banking 9 12.9%
Other 32 45.7%
Total 70 100%
Table no. 4.7

Credit card
5.7% Debit card
10.0%

Other
45.7%

Mobile-wallet {G-
pay, phone, Etc}
25.7%

Online banking
12.9%
Credit card Debit card Mobile-wallet {G-pay, phone, Etc} Online banking Other

This suggests that out of 58 respondents who have been victims of electronic payment
fraud, 22 (or about 38%) were using Mobile wallets like G-pay or Phone-pay, 6 (or
about 10%) were using Online banking, 7 (or about 12%) were using Debit cards, and
3 (or about 5%) were using Credit cards at the time the fraud occurred. There are 20
respondents (or about 34%) who were using other payment methods.

49 | P a g e
 No. of frauds in a No. of respondents Percentage
year
Never 40 57.1%
Once 19 27.1%
Twice 5 7.1%
More than twice 6 8.6%
Total 70 100%
Table no. 4.8

More than twice

9%
Twice
7%

Once Never
27% 57%

Never Once Twice More than twice

This suggests that out of 70 respondents who have been victims of electronic payment
fraud in the past year, 6 (or about 8.6%) experienced it more than twice, 19 (or about
27.1%) experienced it once, and 5 (or about 7.1%) experienced it twice. The majority,
40 respondents (or about 57.1%), have never experienced electronic payment fraud in
the past year.

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 preferance No. of respondents Percentage
convenience 39 55.7%
Speed 40 57.1%
Safety 30 42.9%
Rewards or cash back 14 20%
No need to cary cash 26 37.1%
Other 11 15.7%
Total 70 100%
Table no. 4.9

45 60.00%
55.7% 57.1%
40
39 40 50.00%
35
42.9%
30 40.00%
30 37.1%
25
26 30.00%
20
15 20.0% 20.00%
15.7%
14
10
11 10.00%
5
0 0.00%
convenience Speed Safety Rewards or No need to Other
cash back cary cash

No. of respondents Percentage

This suggests that out of 70 respondents, the most common reason for choosing
electronic payment methods is Convenience (39 respondents), followed by Speed (40
respondents), Safety (30 respondents), and No need to carry cash (26 respondents).
Rewards or cash back is also a significant factor for 14 respondents. There are 11
respondents who chose electronic payment methods for other reasons.

51 | P a g e
 Opinions No. of respondents Percentage
Phishing 30 42.9%
Public wi-fi networks 20 28.6%
Data breaches 15 21.4%
Card skimming 19 27.1%
Lack of user awareness 29 41.4%
Total 70 100%
Table no. 4.10

35 50.0%
42.9% 41.4% 45.0%
30
40.0%
25 35.0%
28.6% 30.0%
20 27.1%
21.4% 25.0%
15 20.0%
10 15.0%
10.0%
5
5.0%
30 20 15 19 29
0 0.0%
Phishing Public wi-fi Data breaches Card skimming Lack of user
networks awareness

No. of respondents Percentage

The most significant factors contributing to electronic payment fraud are phishing
attacks, data breaches, card skimming, and the lack of user awareness regarding security
measures. These factors underscore the importance of educating consumers about fraud
prevention strategies, implementing robust security measures, and enhancing
collaboration between stakeholders to combat electronic payment fraud effectively.

52 | P a g e
 Security measurers No. of respondents Percentage
Yes 30 42.9%
No 20 28.6%
Maybe 20 28.6%
Total 70 100%
Table no. 4.11

Maybe
28.6%
Yes
42.9%

No
28.6%

Yes No Maybe

There is a significant proportion of respondents who either reported not having any
security measures in place or were unsure about the level of security at the time of the
fraud incidents. This highlights a potential gap in awareness or implementation of
essential security practices among consumers, which could increase their susceptibility
to fraudulent activities.

Overall, the presence or absence of security measures at the time of the fraud incidents
underscores the importance of implementing robust security practices, such as two-
factor authentication, secure passwords, and regular monitoring of account activity, to
mitigate the risk of electronic payment fraud. Enhancing consumer awareness and
education about security best practices is crucial in reducing vulnerabilities and
protecting against fraudulent activities in the digital realm.

53 | P a g e
 Fraud prevention No. of respondents Percentage
Yes 41 58.6%
No 7 10%
Maybe 22 31.4%
Total 70 100%
Table no. 4.12

Maybe
31.4%

Yes
58.6%

No
10.0%

Yes No Maybe

Based on the responses provided, there is a mix of opinions regarding whether the fraud
could have been prevented. While many individuals believe that preventive measures
could have been taken to avoid the fraud incidents, some are uncertain or sceptical about
the possibility of prevention. This variability in perspectives suggests that the
effectiveness of preventive measures may vary depending on the specific circumstances
and security practices in place.

Overall, the responses highlight the importance of implementing proactive security

measures and staying vigilant to mitigate the risk of electronic payment fraud. While
prevention may not always be guaranteed, taking steps to enhance security awareness
and implement robust security practices can significantly reduce vulnerabilities and
protect against fraudulent activities.

54 | P a g e
 Recemmendation No. of respondents Percentage
Ye 27 38.6%
No 11 15.7%
Maybe 32 45.7%
Total 70 100%
Table no. 4.13

Ye
Maybe 38.6%
45.7%

No
15.7%

Ye No Maybe

Based on the responses provided, there is a mixed sentiment regarding recommending

electronic payment methods to others. While some individuals express a positive
inclination towards recommending electronic payment, others indicate a more cautious
or sceptical stance, depending on the situation. This variability suggests that individuals
consider various factors, such as security concerns, convenience, and personal
experiences, when evaluating the suitability of electronic payment methods for
themselves and others.

Overall, the responses reflect the nuanced perspective individuals have towards
electronic payment methods, highlighting the importance of considering individual
circumstances and preferences when making recommendations. While electronic
payment methods offer convenience and efficiency, it's essential to weigh the associated
risks and benefits and choose payment methods that align with one's comfort level and
security preferences

55 | P a g e
 CHAPTER-5
FINDINGS

Demographic Insights:

 The majority of respondents are below the age of 25, indicating a younger
demographic.
 There is a fairly even distribution of genders among the respondents.
 Most respondents have attained at least a high school education, with many
being graduates.

Usage of Electronic Payment Methods:

 The most commonly used electronic payment method among respondents is "G-
pay" (Google Pay), followed by "Phone pay," "Paytm," and "BHIM."
 Many respondents use multiple electronic payment methods, suggesting a
diverse range of preferences among users.

Experience with Electronic Payment Fraud:

 A significant portion of respondents has experienced electronic payment fraud,

with phishing attacks being the most commonly reported type of fraud.
 Other types of fraud mentioned include card skimming, data breaches, and
misuse of public Wi-Fi networks.

Factors Influencing Choice of Electronic Payment Methods:

 Convenience, speed, safety, rewards/cashback, and the elimination of the need

to carry cash are the primary reasons cited for choosing electronic payment
methods.
 Lack of user awareness about security risks associated with electronic payments
is identified as a key factor contributing to fraud incidents.

Security Measures and Prevention:

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  While some respondents reported having security measures in place at the time
of fraud, such as two-factor authentication and secure passwords, others did not,
indicating a varied level of awareness and preparedness.
 There is a belief among respondents that fraud incidents could have been
prevented with proper security measures and user education.

Recommendations and Awareness:

 Respondents express a willingness to recommend electronic payment methods

to others, contingent upon factors such as situational context, security measures,
and user awareness.
 Recommendations for preventing fraud include improving consumer
awareness, implementing stronger authentication measures, avoiding sharing
sensitive information, and staying vigilant against phishing attempts.

User Perception and Satisfaction:

 While some respondent’s express satisfaction with the convenience and benefits
of electronic payment methods, others highlight concerns about security risks
and the need for greater user education and awareness.
 There is a recognition of the importance of proper knowledge and caution in
using electronic payment methods to mitigate the risk of fraud.

Age and Education Influence:

 Younger respondents, particularly those below 25 years old, demonstrate a

higher propensity for using electronic payment methods and a greater
susceptibility to fraud incidents.
 Higher levels of education, such as post-graduation, correlate with a better
understanding of security risks and the adoption of preventive measures.

In summary, the findings highlight the widespread adoption of electronic payment

methods, the prevalence of fraud incidents, and the importance of user awareness and
security measures in safeguarding against fraud. There is a need for continuous
education and improvements in security infrastructure to enhance consumer confidence
and trust in electronic payments.

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 CHAPTER-6
FINDINGS & CONCLUSION

Electronic payment fraud is a multifaceted challenge that demands a holistic approach

from stakeholders across industries and regulatory bodies. Throughout this
comprehensive analysis, we've explored the various forms, underlying causes, detection
methods, and preventive measures associated with electronic payment fraud. As we
conclude, it's evident that addressing this issue requires a combination of technological
innovation, regulatory oversight, industry collaboration, and consumer education.

Firstly, understanding the evolving landscape of electronic payment fraud is crucial.

From traditional methods like card skimming to sophisticated cyberattacks leveraging
AI and automation, fraudsters continuously adapt their tactics to exploit vulnerabilities
in digital payment systems. By staying informed about emerging threats and evolving
fraud patterns, stakeholders can better anticipate and mitigate risks.

Secondly, effective detection and prevention strategies are essential for combating
electronic payment fraud. Advanced fraud detection systems powered by AI and
machine learning offer real-time insights into suspicious activities, enabling timely
intervention. Additionally, implementing multi-factor authentication, encryption, and
tokenization enhances the security of payment transactions and protects sensitive data
from unauthorized access.

Thirdly, regulatory compliance and industry standards play a pivotal role in

strengthening the resilience of electronic payment systems. Initiatives such as the
Payment Card Industry Data Security Standard (PCI DSS) and anti-money laundering
(AML) regulations set forth requirements for safeguarding payment data and detecting
fraudulent activities. Moreover, collaborative efforts among stakeholders foster
information sharing, best practices dissemination, and collective response to emerging
threats.

Furthermore, technological innovation holds promise for enhancing the security and
efficiency of electronic payments. From blockchain-based solutions to biometric
authentication, ongoing research and development efforts aim to bolster the resilience
of digital payment ecosystems against fraudsters' tactics. By embracing innovative

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technologies and standards, stakeholders can stay ahead of evolving threats and ensure
the integrity of electronic transactions.

Lastly, consumer awareness and education are paramount in the fight against electronic
payment fraud. Empowering consumers with knowledge about common fraud schemes,
phishing tactics, and security best practices enables them to recognize and report
suspicious activities. Similarly, educating employees within organizations helps
cultivate a culture of vigilance and compliance, reducing the likelihood of insider
threats and human errors.

In conclusion, addressing electronic payment fraud requires a collaborative and

proactive approach that encompasses technological innovation, regulatory compliance,
industry collaboration, and consumer education. By collectively working towards
enhancing the security and integrity of electronic payment systems, stakeholders can
mitigate risks, foster trust, and ensure the continued growth and adoption of digital
transactions in the global economy.

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 CHAPTER-7
SUGGESTIONS & RECOMMENDATIONS

Suggestions and Recommendations for Consumers Facing Electronic

Payment Fraud

Educate Yourself:

Take the time to educate yourself about common electronic payment fraud schemes,
such as phishing, identity theft, and card skimming. Understand the warning signs and
red flags of potential fraud, such as unsolicited emails or requests for personal
information.

Secure Your Devices:

Ensure that all your devices, including smartphones, tablets, and computers, have up-
to-date security software installed. Regularly update operating systems and applications
to patch vulnerabilities and protect against malware and viruses that could compromise
your sensitive information.

Use Strong Authentication:

Opt for strong authentication methods, such as biometric authentication (fingerprint or

facial recognition) or two-factor authentication (2FA), whenever possible. These
additional layers of security can significantly reduce the risk of unauthorized access to
your accounts.

Monitor Your Accounts Regularly:

Stay vigilant by regularly monitoring your bank statements, credit card transactions,
and other financial accounts for any unauthorized or suspicious activity. Report any
discrepancies or unfamiliar transactions to your financial institution immediately.

Be Wary of Phishing Attempts:

Exercise caution when receiving emails, text messages, or phone calls requesting
personal or financial information. Avoid clicking on links or downloading attachments
from unknown sources, as they may be phishing attempts designed to steal your
sensitive data.

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Protect Your Personal Information:

Be cautious about sharing personal or financial information online, especially on social

media platforms or unsecured websites. Avoid providing sensitive details such as your
Social Security number, passwords, or credit card information unless absolutely
necessary and only on secure, trusted websites.

Enable Account Alerts:

Take advantage of account alerts and notifications offered by your financial institution
to receive real-time updates on account activity. Set up alerts for large transactions,
account logins from unrecognized devices or locations, and other suspicious activities
to detect potential fraud early.

Secure Your Passwords:

Use strong, unique passwords for each of your online accounts and avoid using easily
guessable information such as birthdays or common phrases. Consider using a reputable
password manager to securely store and manage your passwords across different
accounts.

Be Sceptical of Unsolicited Offers:

Exercise caution when encountering unsolicited offers or deals that seem too good to
be true, especially when shopping online or downloading apps. Fraudsters often use
enticing offers as bait to lure unsuspecting consumers into scams or fraudulent schemes.

Report Suspicious Activity:

If you suspect that you've been a victim of electronic payment fraud or have
encountered fraudulent activity, report it to your financial institution, credit card issuer,
or relevant authorities immediately. Prompt reporting can help mitigate further damage
and facilitate investigations into the incident.

By implementing these suggestions and recommendations, consumers can enhance

their awareness, vigilance, and security posture when conducting electronic payments,
thereby reducing the risk of falling victim to fraud and safeguarding their financial well-
being.

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 APENDIX-1
REFFERANCE

 https://shodhganga.inflibnet.ac.in/handle/10603/387459

 https://www.scribd.com/document/418661246/Electronic-
Payment-Current-Scenario-and-Scope-for-Improvement

 https://journalppw.com/

 https://www.jstor.org/stable/249008?seq=1#page_scan_tab_content
s

 http://rbi.org.in/scripts/publicationvisiondocument.aspx?id=678

 www.ijcrt.org

 https://www.researchgate.net/publication/349381000

 https://www.statista.com/outlook/296 /119/digital-payments/

 http://cashlessindia.gov.in/aeps.html

 https://www.pwc.in/consulting/finan cial-
services/fintech/dp/impact-of- the-covid-19-outbreak-on-digital-
payments.html

 https://www.thehindu.com/data

 https://www.outlookindia.com

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 APENDIX-2

1. AGE?
 Below 25
 26-35
 36-45
 46-55
 56 & above

2. GENDER?
 Male
 Female
 Prefer not to say

3. QUALIFICATION?
 SSC
 HSC
 Student
 Graduate
 Other

4. Have you ever used any electronic payment methods {credit card,
mobile wallet, online banking, etc}?
 Yes
 No

5. Which electronic payment method do you use to transfer funds?

 G-pay
 Phone pay
 BHIM
 Paytm
 Other

6. Have you ever been a victim of electronic payment fraud?

 yes
 no
 maybe

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7. If yes, what type of electronic payment method where you using
when the fraud occurred?
 Credit card
 Debit card
 Mobile wallet {G-pay, phone pay, etc.}
 Online banking
 Other

8. How many times have you experienced electronic payment fraud in

past year?
 Never
 Once
 Twice
 More than twice

9. Why do you choose electronic payment methods {select all that

apply}?
 Convenience
 Speed
 Safety
 Rewards or cash back
 No need to carry cash
 Other

10.In your opinion, which of the following factors contribute most

significantly electronic payment fraud?
 Phishing attacks {online fraud like debit/credit card
information, username, passwords}
 Public wi-fi networks
 Data breaches
 Card skimming
 Lack of user awareness

11.Did you have any security in place of time of the fraud {e.g. two-
factor authentication, secure passwords}?
 Yes
 No
 Maybe

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12.Do you believe the fraud could have been prevented?
 Yes
 No
 Maybe
13.Would you recommend electronic payment method to others?
 Yes
 No
 Depends on the situation

14.What security measures do you think will save consumers from

becoming victims of online fraud?


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