The Central Bank of Iran's recent measure to make one-time password (OTP) obligatory has made it harder for cardholders to make online and mobile payment transactions.
However, the rule has resulted in a 50% drop in total number of illegal withdrawals, according to the deputy head of Tehran Cyber Police Department.
"Fortunately OTP has made a considerable impact on cutting cybercrime. However, the banking payment network needs to address the shortcomings to lessen risks associated with unruly operations," Colonel Davood Moazami Goodarzi was quoted as saying by way2pay website.
"We have identified a number of bugs and sent all the relevant information to the CBI to take charge," he added.
In January and in a move to curb cybercrime pertaining to debit card fraud and increase security of fast increasing online banking, the CBI instructed banks and credit institutions to offer OTP service to protect their clients' ID and bank accounts.
OTP, developed to address shortcomings of static passwords, is a code valid for a single login or online transaction on a computer system or other digital devices that gets automatically discarded in 60 seconds.
"Cyber thieves used to make successive transactions to make it hard for police to detect their disruptive operations. Such transactions had a considerable share in the high number of payments in the recent past.”
Using OTP is a hassle for many people as they are need to install special applications on their smart phones. Some people complain that they do not own a smart phone to be able to use the service.
To cope with this inconvenience, SMS services were offered by the CBI to address customers who don’t use smart phones to install banking applications.
Against Expectations
Experts had been expecting a sharp decline in the number of online transactions after the implementation of the controversial CBI plan because it would make the process a bit complicated for cardholders.
However, the monthly report published by Shaparak Company, the body in charge of supervising national electronic payments, does not show significant decline in the total online transactions during the first two months of OTP implementation (Jan 20 to March 19).
Moreover, the coronavirus pandemic has given a big boost to online banking by the general public as they prefer to stay away from banks and their ATM machines available at every nook and corner.
The same is true for cash transactions in the ongoing COVID-19 crisis. Few if any shopkeepers in Iran are willing to accept cash from customers fearing the infectious disease. Even hawkers and street vendors insist on and demand debit cards when selling their wares.
As such, the coronavirus outbreak is prompting second thoughts about reaching for cash all over the world.
As the number of cases rises, people are going cashless to avoid potential hygiene issues around handling banknotes. Regardless of whether there’s a proven risk, the ‘psychological factor’ of people thinking of cash as ‘unclean’ could change how they choose to pay.
Merchants are encouraging people not to use cash, citing Coronavirus, physicians and market observers say, adding that there would be “some trigger to accelerate behavior from cash to digital payments,” news outlets reported recently
The US Federal Reserve, for instance, is changing how it handles greenbacks. As a “precautionary measure,” it increased the minimum holding period for bills coming from Asia and Europe to the US to a 10-day minimum. The previous minimum was five days.
Banks in China, where the outbreak started, were ordered to disinfect cash before issuing it to the public in an attempt to slow the virus spread.
