Wednesday, 5 October, 2022
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Safe Digital India cess? Govt considers ‘security fee’ for every digital payment

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An expert said that the cess could be used to create a fund to battle the growing number of cases of online fraud in digital payments.

New Delhi: A high-level meeting on how to curb cyber fraud in digital transactions has proposed the imposition of a token ‘security fee’ on every digital payment in India.

The suggestion from the Department of Financial Services was among many others from participants.

Nasscom Internet Council head Prasanto K. Roy said that a fee on every digital transaction could be aimed at starting a fund to create better infrastructure to secure digital transactions, like the Swachh Bharat cess.

“A special fund could help develop security infrastructure, hire experts and secure online transactions, though a cess on digital transactions isn’t the best way of doing it,” he told ThePrint. “The Ministry of Finance and the Ministry of Electronics and Information Technology (MeitY) need to encourage digital transactions by making them cheaper, not more expensive. There are other, better ways to fund digital security.”

Emails and calls to officials from the Department of Financial Services regarding the proposal received no response.

The focus of the meeting held on 13 September was to discuss measures to make digital transactions safer. The meeting, chaired by Home Minister Rajnath Singh, was attended by officers from the MeITY, Home Ministry, Department of Financial Services, Department of Telecom, Reserve Bank of India and Intelligence Bureau.

“The meeting was attended by all major stakeholders to discuss and recommend ways on how to make these transactions safer as the number of people shifting to digital payments are expected to increase by next year,” an official from the Ministry of Home Affairs said on condition of anonymity.

“It was also discussed that an Act needs to be in place for regularising digital payments, which will be looked after by the finance ministry, and to how fix the responsibilities of agencies,” the official said.

Cyber frauds targeting e-payments have been on the rise. Official figures say that cases related to e-wallets and e-payments (that were reported to banks) jumped from 13,083 cases in 2014-15 to 16,468 cases in 2015-16.

The Intelligence Bureau proposed the Indian government ensure the development of a software that detects attempts at cyber fraud. As per the suggestion, the software once developed should be incorporated by payment gateways so that customers can be alerted about suspicious transactions. .

“There needs to be a machinery to detect out-of-bound transactions and the pattern of violations in cyber fraud cases. The machinery should be able to figure if the transaction is fraudulent by looking at its pattern and send alerts,” Nasscom’s Roy said.

MEiTY recommended the creation of a literacy campaign on digital payments to educate people and keep them secure.

“Most online frauds happen as people share their passwords, ATM pins, 3D secure pins, and there is a need to educate them about it. Also, a standard procedure for all e-wallets needs to be in place as right now anyone can make a wallet just by downloading the app. The KYC norms need to be strengthened for safer transactions,” the official from the Home Ministry said.

As a first step though, the Home Ministry has recommended the creation of a dedicated cyber-forensics lab. The ministry has suggested that 27,500 police personnel, along with 13,000 forensic officers, be trained on how to tackle cyber fraud cases.

“As of now we do not have the manpower or expertise to deal with cyber fraud cases, which is going to be challenging…we need to be prepared,” the Home Ministry official said.

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  1. Ease in digital payment will more and more customers and government is also getting more benefits from the companies in the form of GST and other taxes.

  2. Well, I agree with this article. But i think some people will not agree about this step.

  3. the government seems to be bent on shirking its responsibility while levying charge upon charge. insecurity in online payments is not due to existing systems like neft/imps/RTGS, but newly added systems that were implemented without much thought: upi, aadhaar payments etc. suggest the government stops pushing aadhaar linking on to every platform, concentrate on securing existing platforms, and doing so with funding from its existing resources. if the claims of the government are to be believed, demonetization should have boosted revenues of banks, and there should be no need to add a further cess.

  4. Why should customers bear safe digital cess? It is the responsibility of banks and shadow banks (like e-wallet and fintech companies) to bear the cost of maintaining digital assets and secrecy. Slapping a digital cess on customers is a retrograde step. First the government would start with a nominal charge, which would grow over time thereby becoming a substantial source of fee-based income for banks. When banks are required to manage their digital assets as part of operational risk management (ORM) as per Basel guidelines, why should they shirk their responsibility in bearing the cost? RBI should pull up banks for not securing their digital infrastructure as part of ORM. Besides, shadow banks should be brought under regulatory purview and erring shadow banks should be taken to task. RBI should conduct digital audit of banks and shadow banks to protect the interests of customers.

  5. If for everything there is a separate cess. Then whybare we paying tax on the first place. Govt is trying to bust all the money we are earning by hard work.

  6. I am affraid, this might lead to less online transactions. Where govt want to go cashless, then this decision might give -ve feedback.
    If govt really wants to go cashless they certainly has to invest on infrastructure.
    However I dont think except demonotization, none of the steps from govt leed us to cashless economy. No follow up steps has been taken to maintain the momentum.

  7. I think Governmnt of india need only consider matters in its domain. The transactions are safe abroad with no cess and the responsibliy rests on the card issuers and their insurers. The “cess”is included in the card’s fees

  8. What is needed is an insurance mechanism to reimburse people defrauded by cyber criminals,not cess upon cess.
    Just collecting cess will not provide succour to those whose hard earned money is swindled by cyber criminals.
    People wouldn’t mind paying a small premium based upon percentage of transactions like in rail tickets to ensure the reimbursement of their hard earned money in case of misappropriation or swindling or fraud.

  9. Generating ideas to raise funds even before doing anything on the issue!! This will kill digital payments. First build whatever security system you want to test it and prove it over a stable period and then think of imposing fee. If you cut the huge unproductive government expenditure even by half, you will have all the funds needed for any expenditure.

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