Data security fears are holding back India's smartphone resale market: Cashify 

Data security concerns are emerging as a key obstacle to the growth of India's smartphone resale market, with 69% of consumers saying privacy fears prevent them from choosing to sell their phones, according to a survey by recommerce platform Cashify. The survey of 8,000 respondents found that 74% are concerned about the potential misuse of personal data after selling a smartphone, even as device resale becomes increasingly common. More than half (56.6%) of respondents said they have sold or exchanged a smartphone, indicating that recommerce has become a mainstream consumer behaviour.

However, growing participation has not translated into greater confidence. "Participation is rising, awareness is rising, and concern is rising, but the responsibility for data safety is still falling disproportionately on the user," says Nakul Kumar, co-founder of Cashify. "Devices today carry years of personal, financial, and identity data. As resale volumes scale, data safety cannot remain an individual burden. It needs to be treated as a default responsibility of organised platforms and the systems that enable recommerce, supported by clear policy frameworks."

The findings suggest that trust is increasingly becoming a deciding factor in resale transactions. Around 45.3% of respondents ranked data privacy and security as the most important consideration when choosing where to sell their smartphone, compared with 29.5% who prioritised price.

Factory resets may not be enough

The survey states that 83.3% of respondents perform a factory reset before selling their phone, but 41.1% acknowledge that a factory reset may not permanently delete all data. More strikingly, 31% report having successfully retrieved deleted data from a phone.

According to Mandeep Manocha, co-founder and CEO of Cashify, consumers often misunderstand the difference between deleting data, performing a factory reset and securely erasing information. “When you perform a factory reset, the device removes visible access to your files and apps, but it does not always overwrite the underlying data stored on the hardware,” says Manocha to Fortune India. “That data, in many cases, can still be accessed using specialised recovery tools. Secure or certified data deletion, by contrast, involves a process that actively overwrites the stored information, making recovery virtually impossible rather than merely inconvenient.”

According to Cashify, the resale decision was almost entirely price-led, but is now changing. The survey found that 45.3% of respondents now rank data privacy and security as the most important factor when choosing where to sell their smartphone, compared to 29.5% who prioritise price.

“What we are seeing is that the concept of ‘best value’ is being redefined. A smartphone today is not just a piece of hardware. It carries years of financial information, personal conversations, identity data, and more. Consumers are beginning to factor in what happens to all of that when they hand over a device. The financial value of the transaction is increasingly being weighed against the risk of data exposure,” says Manocha.

Calls for stronger regulation

The growing awareness of these risks appears to be influencing consumer expectations. The survey found that 68.6% of respondents would trust a resale platform more if it offered certified secure data deletion, while 83.3% said a data deletion certificate is essential when selling a smartphone.

At the same time, 50.8% of respondents say they are willing to pay a small fee for guaranteed secure data deletion. “We believe data security should be a default responsibility of organised platforms, not an optional add-on that consumers have to seek out or pay extra for.”

Cashify believes that awareness gaps, the prevalence of unorganised resale channels and the absence of clear regulations continue to hinder the adoption of secure data deletion practices across the industry. "A large proportion of consumers still equate a factory reset with complete data removal," says Manocha. "Until that gap in understanding is addressed, there is limited pressure on the broader ecosystem to adopt more rigorous standards."

The survey found that 15.6% of respondents were unaware that safer resale options existed, highlighting the need for greater transparency and consumer education. Meanwhile, only 6.3% reported feeling pressured by buyers during the resale process, suggesting that organised resale channels are gradually making transactions more structured and transparent.

Consumer demand for regulation is also growing. According to the survey, 87.2% of respondents believe India needs stricter laws governing data deletion before smartphones are resold. Cashify calls for mandatory data sanitisation standards aligned with global frameworks such as NIST, certified data deletion certificates for resale transactions and stronger oversight of informal resale channels.

"The burden of data privacy and security currently lies with the consumer," says Manocha. "As the market matures, responsibility for data security needs to shift from consumers to the organised recommerce ecosystem, supported by clear policy architecture."