What is Payment Fraud and How Can it be Avoided?

What Is a Payment Fraud?

In simple words, a payment fraud is any form of unauthorized or fraudulent transaction executed by a cybercriminal using a payment instrument with the intent of robbing a consumer or merchant of their money.

I’ve never been affected, should I be worried?

With an average of 100 million transactions per day, an increasing preference for digital transactions has caused a parallel increase in the average citizen’s vulnerability to digital fraud. Skilled cybercriminals manage to easily manipulate and steal someone’s payment information through deceit and sophisticated schemes that use false identities to steal large sums of money. However, with greater awareness and proactive vigilance from financial institutions, payment fraud can be easily avoided. In this regard, Innoviti’s offline payment solutions have demonstrated a sustained track record of proven data security, providing ease of conducting business for merchants, thereby increasing customer’s trust and preference in offline purchase.

Avenues for Payment Fraud?

Consider the following:

According to the above chart visualized from official data, 61,100 complaints were recorded in the month of May, on a single day witnessed an average of 2,037 complaints. If this accounts for only the registered complaints, one can only imagine the magnitude of payment fraud that is plaguing the payment space in India.

Such statistics ought to increase the urgency of the average consumer to be doubly aware of the looming threats involved in negligent digital transactions in order to safeguard them from vicious attacks.

From the the nature of the registered complaints, it can be surmised that payment frauds can occur through:

  • Phone Call
  • SMS
  • Email
  • Bugging phones with malware
  • E-wallets
  • Affiliate links that route you to fraudulent websites

How Does Fraud Happen?

Each type of fraud to be successful just requires consumer negligence and one of the following to be successful:

– A password, personal identification number (PIN) or an one-time-password (OTP)

– A physical credit/debit card, a cheque or account details

– Biometric information, a facial identifier, or a fingerprint

Hence, the unaware consumer, due to the nature of these channels, can easily fall prey to predatory attacks by cybercriminals.

Types of Payment Fraud?

Now that you are familiar with the various channels through which you can be targeted, consider the following types of potential attacks:

  1. Phishing: When cybercriminals ‘fish’ for personal payment information and personal information like usernames, email and passwords, it is termed as a phishing attack. According to the Norton Cyber Safety Pulse Report, India faced around 60,000 in the first quarter of this year. Given its severity, as a rule of thumb one must not divulge personal information to unverified websites, especially when rerouted to a third party website
  2. Identity theft:This when hackers extract personal information through a customers IP address or by accessing their data through a public wifi connection. Another compelling means of committing theft is through the impersonation when cybercriminals disguise themselves as legitimate representatives of banks or financial institutions.
  3. Merchant identity theft: Fraudsters set up an invalid but convincingly legitimate merchant account to run illegal transactions, they are said to commit merchant identity theft. Usually, funds are channeled through stolen cards to the faulty merchant account. These often go undetected by the rightful card owners and can lead to a huge loss of money.
  4. Payment Gateway Fraud: A payment gateway is required to make a payment on e-commerce platforms. These are cardless transactions in the sense that one does not require to be in the physical possession of one’s card to carry out a payment gateway fraud. One simply needs to commit identity theft or phish for personal details to successfully steal funds using someone else’s details.

Hence, despite the relative safety of digital means of payment, a gifted and persuasive cybercriminal, with the relevant knowhow, can bypass security measures to steal payment information and siphon out funds.

A commitment to merchant growth and consumer interests drives the design, purpose and utility of Innoviti’s payment solution. While the scope of payment fraud is greatly reduced in offline transactions, Innoviti’s point of sale (PoS) terminal comes equipped with durable technology that dramatically eliminates transaction failure while safeguarding merchant and customer information. With Innvoiti’s genie, trust in product quality, flexible payment options and merchant relation has redeemed the customer’s confidence in offline purchase. Furthermore, Innoviti is one of India’s only Fontechs to have the SOC3 Seal of Compliance guaranteeing security, integrity and privacy while delivering all its services.

The Investment Gap

While most payment frauds target individual citizens, the advent of increasing rates of such attacks actually points to the poor cybersecurity infrastructure that serve as final lines of defense in terms of digital payment. As much as it is important for the private consumer to be cautious, fintech firms, incumbent banks and the government must ensure security while innovating, investing sufficient funds into consumer safety.

Innovation as Security

Necessity is the mother of innovation. In line with this motto, Innoviti’s patent on double debt avoidance is bringing resilience to offline payments and consumer confidence in merchant services. Double debt is when the consumer is compelled to swipe their card twice at the PoS terminal for the same product as network unreliability fails to credit the appropriate sum of money into the merchant’s account. In such a scenario, the consumer, despite being debited, is forced to bear the brunt of unreliable and faulty networks. With Innoviti’s innovative solution, the potential of double debt has been virtually eliminated at Innoviti terminals, reducing the scope for fraud.

Measures to Avoid Payment Fraud?

The solution is then three-fold:

– For a consumer: Knowledge is security. By being aware of trends in payment fraud, your money will be safe and your transactions will be informed decisions.

– For a merchant: Working with institutions like Innoviti that prioritizes your financial data and future will help address cyber security in cost-effective ways. We reduce investment costs for the merchant through our one-of-a-kind collaborative commercial platform and channel military-grade cyber security technology.

– For a financial institution: Through due diligence, compliance to regulatory protocol, innovation, and appropriate investment in appropriate technology will go a long way in safeguarding sensitive data and creating an ecosystem that eliminates scope for payment fraud.

With sophisticated payment solutions comes innovative ways of committing fraud. Innoviti’s role as a growth partner to merchants does not end with the delivery of our product. Innoviti is fortunate to enjoy 76% of India’s offline enterprise market share not merely because we help merchants increase sales, but rather due to our commitment to protect the integrity of transactional data. Utilize Innoviti’s services to set up your offline business and safeguard the interests of your customers. Businesses have witnessed increased footfall, sales and customer loyalty on using Innoviti’s products. Fraud-proof your payments and business by registering your interest with Innoviti today.


Although there are several methods that fraudsters attempt to commit this type of fraud, these are the main ways that we frequently see it taking place.

  • Phishing Attacks
  • Identity Theft
  • Merchant Identity Fraud
  • Payment Gateway Fraud


  • Keep an eye on your credit cards. Keep your cards in a safe wallet or handbag.
  • Do not store the pin code, netbanking information or e-wallet pins either in written form or as soft copy. If you are forgetful and would like to have them saved on your phone, your safest option is a password protected folder.
  • Do not allow websites to “remember” your credit card information. Only enable secure payment platforms, such as GooglePay and PayPal, to do so.
  • While shopping on e-commerce platforms, especially unpopular ones, use caution. It is always safer to purchase the identical product on a verified platform.
  • In case you misplace or lose your debit or credit card, or your sim card, contact your bank to have them blocked immediately.
  • Check your monthly statement. For any unusual account activity, always read over your monthly statement.
  • Use a trusted payment service and purchase partner, like Innoviti which allows for safe, secure and fast transactions.



  • Use AVS (Address Verification Service)
  • Be aware of user location
  • Keep a record of the shipping destination
  • Pay attention to IP Proxies use
  • Always check your email address
  • Look out for theft and fraud patterns



  • Contact the police immediately You should contact the police as soon as possible to report the incident. You will need a crime number from the police to work with your bank and other organizations
  • Inform your bank immediately Assuming your wallet and cards have been stolen, have them blocked and ask for service provider to reissue fresh cards
  • Be wary of recovery fraud Criminals frequently contact their victims after stealing money while posing as their bank, the police, or money recovery specialists. Caller identification applications are handy tools to screen such calls which are often tagged as fraudulent.