Abstract

The digital payment ecosystem in India has experienced exponential growth, significantly enhancing convenience, accessibility, and financial inclusion. The proliferation of mobile wallets, Unified Payments Interface (UPI), and fintech solutions has led to a cashless economy, enabling seamless transactions. However, this transformation has also resulted in rising financial frauds and legal complexities. Cybercriminals increasingly exploit vulnerabilities in digital payment systems, leading to unauthorized transactions, data breaches, identity theft, and money laundering. These fraudulent activities pose severe challenges to consumers, financial institutions, and regulatory authorities. This paper explores the legal risks associated with digital wallets and mobile payments in India by analyzing the existing regulatory framework, common fraud mechanisms, enforcement challenges, and consumer protection mechanisms. It examines key laws, including the Payment and Settlement Systems Act, 2007, the Information Technology Act, 2000, the Prevention of Money Laundering Act, 2002, and recent amendments in criminal laws such as the Bharatiya Nyaya Sanhita (BNS). Furthermore, the study highlights landmark cases that have shaped the legal discourse around financial frauds and digital payment security. With the advent of sophisticated cyber threats such as AI-driven frauds, phishing attacks, and deepfake scams, India’s legal landscape must evolve to address these emerging risks. This paper evaluates the role of regulatory authorities such as the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) in strengthening cybersecurity measures. It also discusses government initiatives aimed at enhancing digital literacy and fraud prevention. By examining real-world fraud cases and legal precedents, this study provides a comprehensive understanding of the evolving digital payment landscape. It offers recommendations for policy reforms, cybersecurity enhancements, and consumer awareness strategies to build a more secure and resilient digital financial ecosystem in India.

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