In a rapidly emerging Fintech Payments market like India, the Cyber security threat is all the more pertinent considering the size of the payments market and the fact that India is one of the most vulnerable countries in the world that is prone to cyber-attacks, according to a report launched on Friday by The City of London Corporation and PwC India on the fintech landscape in India and UK.


The joint publication, which is based on new data from PwC, aims to educate payment firms in the UK and India on the opportunities and challenges in each other’s markets, and the huge potential for collaboration between industry in the two countries.


Describing that India with a population of 1.3bn people is on the cusp of an explosive growth in the Fintech space since the past 3-4 years, the report also cautioned that increasingly, people are concerned about the safety of the information submitted to the payment firms. 


“There appears to be a negative image which is formed regarding the information security and tracking of shopping habits of customers using digital payment platforms.’’ said the report.


Enlisting some of the potential challenges in the payments space in India, the report pointed out that   
weak technical integration is one of the challenges faced by the payment firms. 


“There is a lack of interface between the processing systems which lead to processing and payment delays, increased fees and lost transactions. The lack of improved technology leads to firms’ inability to handle huge traffic when new products are introduced,’’ explained the report. 

Regulations need not to be ownership-driven and could provide suitable regulations for all instruments. Mobile wallet companies are important and active contributors to the payments ecosystem in India. 

However, there appears to be disparities in the regulations on PPIs (prepaid instruments)/wallets for banks and non-banks in India. Banks can operate open wallets that allow cash-out facilities for customers to use interoperable payments systems. Non-banks, on the other hand, can operate only a semi-closed wallet which does not allow cash-outs, said the report.


Some of the other findings of the report are- 

-Total financial transactions on retail digital payment platforms in India are projected to grow by 400% from Rs 200 billion in 2017-18 to Rs 1 trillion (£10 billion) by 2023;
-By 2020, around 720 billion transactions are projected to be made in India through the use of Unified Payments Interface (UPI) technology. Currently 40% of the total population of India is currently unbanked and more than 80% of the payments in India are still made by cash;
-The newly introduced Payment Service Directive (PSD2, introduced in 13 January 2018) has led to a high cost of compliance for companies;
-The UK’s reputation as a leader in cyber security and India’s expertise in software development offers significant cooperation opportunities, however there is currently a gap in skills development that regulators can address.