Developing digital literacy to keep consumers safe online

Tristan Chiappini March 17, 2022 10:47

Two years since the surge in adoption of digital payments, shoppers have seamlessly transitioned to their day-to-day use, with online payments becoming second nature for those buying goods and services online. To illustrate the extent to which digital payments have become a permanent fixture of shopping behaviour, the volume of PayNow transactions in Singapore alone in Jan-Oct 2021 hit $64bn, more than double and well above the $25bn recorded in the same time period in 2020. Further data from PPRO also shows that the ecommerce boom is here to stay, with the sector set to grow from its value of US$5.9bn in 2021, to an estimated US$10.7 billion over the next five years.

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

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

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

Building defences from the ground up

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

With such high rates of adoption by people from all walks of life, and with differing levels of financial literacy amongst the digital payments user base, more needs to be done to combat this wave of crime. But with the payment stage being such a crucial part of basket conversion, a delicate balance needs to be struck between communicating the dangers of misuse of digital payments to users, and further encouraging their adoption and usage. Put simply, a prolonged loss of consumer trust in digital payments, and an inability to fight back against scammers, would cost banks, ecommerce platforms and payment service providers dearly.

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

Consumers – ignorance is not bliss

Like many countries across Southeast Asia, online shopping has risen significantly in Singapore in recent times, with 73% of online shoppers in the country having shopped cross-border. While Singapore’s financial regulator has said that consumers will not be held fully liable for financial losses of fraudulent acts, there is an argument that the consumer should still be responsible for having willingly, although unknowingly, given access to their bank details. In an increasingly interconnected financial ecosystem, consumers cannot passively depend on third parties to protect them, no matter how robust the security infrastructure of their payment provider may be.

As a result, the onus is also on consumers to always practice vigilance – more so for the digital native generation, who have grown up always having access to digital payments. Unlike the older generation that were raised without easy access to digital financial services and thus possibly more cautious, the more savvy, younger generation could be more comfortable with such technology and thus fall victim as a result of their complacency. For this audience, there’s an argument that greater financial education is needed from an early age, with continued reinforcement from banks, ecommerce platforms and payment players key to ensuring education keeps pace with ever-developing scams.

Developing digital literacy to keep consumers safe online

For all our advances in digitalisation, this gap between digital consumption and digital literacy needs to be bridged. To plug the gap, some banks have taken the responsibility to educate their customers and upskill them on financial and digital literacy by launching education and awareness campaigns targeted at those who are at risk. At the government level, steps have also been taken to detect and disrupt scams, as well as mitigate losses and to strengthen public education levels. For example, scam prevention app, ScamShield, has seen more than 722,000 SMSes reported to be used in scams, just within the first six months of its launch in November 2020 – and we can only imagine the extent of how many potential scams the public have been protected from since then.

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

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

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Tristan Chiappini

Vice-president and head of partnerships for Asia-Pacific at PPRO