How India can develop its payments fraud prevention model: A study of emerging best practices

Abstract

This paper describes the policy interventions undertaken to control and prevent the rampant fraud that continues to threaten the viability of the digital banking ecosystem in India. In its varied forms, fraud constitutes the primary source of resistance to the transition from cash-based channels to cashless transactions and the benefits associated with such transactions. While presenting a policy overview of fraud prevention tools, this paper analyses the trends in fraud vis-à-vis digital transactions and synthesises global best practices used to rank emerging markets. By providing insight into fraud mechanisms, and then addressing loopholes through relevant policy interventions, the paper develops an evolutionary history of fraud and preventive tools to control its various forms. The paper focuses on the need to prioritise interventions, defining those interventions, and analysing their efficacy and potential for change.