In a major push to enhance security in digital payments, the government is collaborating with leading UPI apps like Google Pay, PhonePe, and Paytm to build a real-time fraud detection system, dubbed a “payment tripwire.” This initiative aims to slow down potentially fraudulent transactions by adding an additional layer of scrutiny, including user alerts and confirmation steps.
The move comes amid rising digital frauds, especially targeting less digitally literate users. As per officials, all transactions—regardless of amount—will undergo stricter checks even if it means a marginal delay in processing. Powered by artificial intelligence, this system analyzes various behavioral and device-based signals to flag suspicious activity.
Key indicators include the age of the sender/receiver, activity level of bank accounts, past fraud flags on accounts, contact book connections, call logs, and unusual interaction times. If transactions are deemed risky, the apps may delay or decline them altogether, prompting users for extra confirmation.
This framework supports the Financial Fraud Risk Indicator launched by the Department of Telecommunications (DoT) in May. Integrated into the Digital Intelligence Platform (DIP), the tool helps financial institutions assess risk levels—ranging from medium to very high—before approving UPI transfers.
Apps like PhonePe have already implemented features such as "Protect" to flag or block risky transactions. Additionally, they leverage data from the DoT’s Digital Intelligence Unit, including lists of disconnected numbers involved in cybercrime. Early results are promising, and officials remain optimistic about curbing fraud at scale.
This unified approach represents a significant move from isolated fraud detection to collaborative, industry-wide prevention. With UPI accounting for over 80% of India’s digital transactions, tackling payment fraud has become critical. According to RBI data, bank frauds surged to ₹36,014 crore in 2024–25, with a sharp rise in digital payment-related incidents.
However, a subject matter expert cautions that these measures alone may not be enough. “While real-time alerts and delays help, they won't fully eliminate fraud,” the expert notes. Instead, they recommend introducing an additional security layer—specifically behavioral biometrics. “If a behavioral biometric algorithm is triggered right after the user enters their UPI PIN, it could verify identity based on patterns like typing speed, finger pressure, and swipe behavior, making transactions 99% fraud-resistant.”
Integrating such advanced technology could offer more robust protection, especially against sophisticated scams and account takeovers, and ensure secure, user-friendly digital transactions at scale.
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