Acknowledging the fintech sector’s critical importance and the escalating concerns surrounding cybersecurity, the Parliamentary Standing Committee on Communications and Information Technology tabled a report during the Budget session of 2024. It lauded the significant growth in digital payments while highlighting important concerns including fraud, recovery process, dominance of foreign companies, etc. Launched in 2015, the Digital India Programme aimed to usher in a digitally empowered society. Notably, government initiatives to encourage a shift to a less cash economy resulted in substantial growth in digital payments over the years. There has been a notable surge in both value and volume of digital transactions between 2017-18 and 2022-23. Projections for the future anticipate a threefold increase in digital payments by 2025, primarily propelled by factors such as widespread smartphone usage, evolving consumer behaviours influenced by the COVID-19 pandemic, and governmental strategies focused on financial inclusion. Report on digital payment and online security measures was tabled in the parliament Acknowledging the sector’s critical importance and the escalating concerns surrounding cybersecurity, the Parliamentary Standing Committee on Communications and Information Technology tabled a report on “Digital payment and online security measures for data protection” during the Budget session of 2024. Inputs from various governmental entities and financial institutions such as the Ministry of Electronics and Information Technology, Ministry of Finance, Ministry of Communications, Indian Cybercrime Coordination Centre, Reserve Bank of India (RBI), National Payments Corporation of India (NPCI), etc. were considered when preparing the report. The committee has expressed its concern over the Fintech sector in India. Dominance of foreign owned Fintech Companies highlighted The Committee’s report highlighted the dominance of foreign-owned fintech companies, including Walmart-backed PhonePe and Alphabet’s Google Pay, in the Indian fintech sector. In terms of volume, the market share of these key players; Google Pay and PhonePe stood at 36.39% and 46.91%, respectively, during October-November 2023. On the other hand, the Indigenous BHIM UPI held a mere 0.22% market share by volume during the same period indicating a low adoption of Indian fintech apps or lower preference for the same. With the growing volume of digital payments in India, the utilization of fintech apps for financial transactions is expected to rise. In light of this, the Committee suggested that a concerted effort to promote and prioritize local Indian players within the fintech sector is required. Further, the Committee also noted that regulatory control over Indian fintech apps would be more practical for regulatory bodies like RBI and NPCI, compared to managing foreign entities with diverse jurisdictions. Fintech apps are used for money laundering The Committee was also alerted to the use of fintech companies for money laundering. An example is the Pyypl app integrated with the MasterCard payment system, which enables global transactions, posing challenges for tracking funds. Based in Abu Dhabi, Pyypl faced fines for anti-money laundering non-compliance. This according to the committee highlights the pressing need for more robust regulation of fintech companies to ensure compliance with anti-money laundering legislation. Fraudulent transactions have increased but low in share of total volume Despite a notable increase in transaction volume over the past five years, the ratio of fraudulent transactions to total transactions has maintained a consistently low level. The fraud-to-sales ratio, indicating the proportion of fraudulent transactions to the total, has been around 0.0015%. As of September 2023, in the current financial year, there was a slight uptick to 0.0016%. Specifically, the percentage of UPI users affected by fraud stood at 0.0189%. Despite concerns regarding the potential misuse of fintech platforms for illegal activities, the overall impact on users has remained relatively low compared to the substantial total volume of transactions. The different types of cybercrimes as reported to the National Cybercrime Reporting Portal between 2021 and 2023 are as given below. Recovery rate of defrauded money is low and is time-consuming process Further, the committee emphasized the need for enhanced efforts to recover defrauded money. Notably, the recovery percentage in cyber fraud cases is alarmingly low. It also acknowledged the complexity of procedures for filing complaints and retrieving lost funds in cyber fraud cases.