ABSTRACT
This research paper examines Card-Not-Present (CNP) fraud, which has grown rapidly in India as people increasingly depend on online payments and digital banking. The study explains how CNP fraud occurs without the physical card and why it has become one of the most common forms of financial cybercrime today. It discusses the major techniques used by fraudsters, such as phishing, SIM-swap attacks, database leaks, and malware, which help them steal sensitive information and carry out unauthorized transactions. The paper also highlights recent trends, NCRB insights, and industry observations that show how organised and technology-driven CNP fraud has become.
To understand the legal response, the research looks at relevant provisions under the Information Technology Act, 2000 and the Bharatiya Nyaya Sanhita (BNS), 2023, along with RBI regulations that guide banks in safeguarding digital payments. Despite these laws, several challenges remain in detection, investigation, and prosecution due to technical limitations, consumer unawareness, and cross-border networks. The paper concludes that a combination of stronger authentication systems, better awareness, improved cyber-policing, and coordinated enforcement is essential to reduce the increasing risk of CNP fraud in India.
Keywords: Card-Not-Present (CNP) fraud, digital transactions, online payment fraud, phishing attacks, SIM-swap fraud, cybercrime in India, banking security, financial cyber fraud, cyber policing, fraud prevention mechanisms.
- INTRODUCTION
As India moves rapidly towards a cashless and digitally driven economy, the dependence on card-based and online payment systems has increased significantly. The growth of e-commerce platforms, mobile banking applications, digital wallets, and contactless payment methods has transformed the way financial transactions are carried out. While these technological advancements have enhanced convenience, speed, and accessibility, they have also given rise to new forms of financial crime. One such emerging and increasingly prevalent form is Card-Not-Present (CNP) fraud, which has become a major concern for consumers, financial institutions, and regulatory authorities.
Card-Not-Present fraud refers to unauthorized transactions carried out without the physical presence of the payment card. Such transactions typically occur through online shopping portals, mobile applications, telephonic orders, or digital subscription services. In these cases, the offender does not require the actual card but merely needs access to sensitive card details such as the card number, expiry date, CVV, or one-time password (OTP). Due to the absence of face-to-face verification, CNP transactions inherently carry a higher risk when compared to traditional card-present transactions, making them more vulnerable to misuse and fraud.
Several interrelated factors have contributed to the rise of CNP fraud in India. These include large-scale data breaches, weak cybersecurity practices, poor digital awareness among consumers, and the rapid adoption of online services without adequate safeguards. Fraudsters commonly employ sophisticated techniques such as phishing, SIM-swap attacks, skimming, social engineering, and mobile malware to obtain confidential financial information. With increasing access to digital platforms, even individuals with limited technical knowledge have become potential targets of such frauds, thereby expanding the scope and impact of CNP-related offences.
Despite continuous efforts by banks and payment intermediaries to introduce enhanced security mechanisms such as two-factor authentication, transaction alerts, and real-time monitoring systems, fraudsters continue to adapt to evolving technologies. The dynamic nature of cybercrime makes detection and prevention challenging, particularly when transactions involve multiple intermediaries or cross-border elements. The anonymity of digital transactions further complicates investigation and enforcement, allowing offenders to exploit jurisdictional and technological gaps.
The expansion of cross-border e-commerce, international payment gateways, and digital subscription models has further widened the exposure to CNP fraud. From the perspective of economic and cybercrime, such fraud not only affects individual victims by causing financial loss and emotional distress but also undermines public confidence in digital banking systems. Additionally, it imposes significant financial and reputational liabilities on banks and financial institutions, ultimately affecting the stability of the digital economy.
In this context, a comprehensive understanding of Card-Not-Present fraud is essential. Examining its nature, methods, causes, and impact provides valuable insight into the challenges faced by the digital financial ecosystem. This study aims to analyse CNP fraud as a growing form of financial cybercrime in India and highlights the need for stronger preventive mechanisms, increased consumer awareness, and coordinated institutional responses to address this evolving threat.