The boom in India's digital payments sector on the back of the pandemic has also led to a rise in the use of electronic data capture (EDC) tools. These are software that allow point of sale (POS) systems to retrieve the customer's banking information, amount due and more.
EDC systems have been deployed on close to 4.7 million terminals right now and expected to reach 12 million by FY2025, according to a report by RedSeer. While this makes for a lucrative market for some, it could also lead to issues for customers, whose data might be traded through such systems.
EDC is the technology that extracts the users’ data and captures the draft or the information of the amount due when making payments through cards or digital wallets. When the funds are secured, the money is transferred to the merchant’s account. These tools can also highlight incongruities to site staff during data entry. It can also diminish paper management time and requires less physical storage capacity.
The technology has been picking up alongside the use of QR code-based payments, the RedSeer report said. Continued adoption of QR for small and mid-size transactions amongst offline merchants will enable them to become a key offline payment category. In addition to this, there is also a steady growth in credit/debit cards for large ticket transactions, the report informed.
According to the report, the number of merchants using QR Codes for payments stood at 30-35 million during FY2021 and will rise to 55-60 million by FY2026.
Further, it pointed out that about two-thirds of the merchants who use only POS intend to add other terminals. The primary reason for this is to get better pricing through different bank tie-ups. The rapid adoption of digital payments among consumers is hard to miss. Understandably, merchants want to leverage this and keep up with the monumental shift from cash to cashless, it added.
“Another factor that merchants are leveraging includes demonetization, which led to a crash crunch in the economy leading to the adoption of alternate payment modes, such as cards, and drove rapid EDC adoption across merchants. Add to this the rise in e-commerce, where payments are mostly digital, and government initiatives that are directed towards a cashless economy, and it is safe to say that the EDC market is set to see an upward trend in the years to come,” the report said.
However, with organisations using digital data collection, which includes sensitive data like payments data, socio economic data or medical data, there is an increased surface for security breach sometimes even through unintentional mishandling.
According to a May 2021 report from Cisco, attacks on endpoint devices became “complex, multi-stage operations” last year. The report also noted that the financial services sector saw more “information-stealing threats” than any other industry in the last year.