A number of major banks in India have taken safety measures amidst fears the security of over 3.2 million debit cards were compromised.
A number of the banks affected have asked customers to change their security codes. They are blocking as well as replacing the cards in additional to requesting code changes.
The breach is believed to have been made by malware places in an ATM network.
Some customers have vigorously complained that large amount of money were debited from their accounts.
In all, there is believed to be over 700 million debit cards issued in India.
The NPCI or National Payments Corporation of India, which controls every retail payments system within the country, confirmed via a prepared statement that a possible compromise had taken place at one payment switch provider’s system.
This large-scale security breach will likely create a great deal of negative sentiment amongst customers of banks. While the incident is now being investigated by the India government, and most do not expect that big of an impact monetary, the damage to the banking system’s reputation will be huge.
Already people in India are overly suspicious of the electronics payment system and the economy is largely operated via cash. Most people pay with cash for the majority of their purchases, whether it is for buying vegetables at the market or gold jewelry at a store.
According to one study completed by Visa, just 11 digital transactions per capita take place in India as compared to 162 in Brazil and 429 for Sweden.
That poses a big financial burden on India’s economy and the banking system has attempted to wean the people off cash.
However, they have not been that successful. Banks in India issued more than 698 million debit cards through the end of July of 2016, which is small compared to many countries.
However, while the India government has attempted to sell the debit card as a method that is risk free compared to using cash, not many have been convinced that the banks are taking sufficient measure to guarantee cyber security.
Banks in India reported nearly 12,000 frauds that were related to debit and credit cards in 2015, said the government earlier in 2016.
All banks in India have protocols for cyber security comparable to those of the peers internationally said one analyst at KMPG India.
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