NPCI's Plan to Remove 'Pull Transactions' on UPI to Reduce Digital Frauds
As part of a move to check rising digital frauds, the National Payments Corporation of India (NPCI) is said to be in preliminary talks with banks to remove 'pull transactions' from the Unified Payments Interface (UPI). The majority of frauds are occurring via the pull system, and NPCI is considering deleting the feature entirely to cut down on fraudulent operations.
A 'pull transaction' occurs when a merchant initiates a payment request to a customer, while a 'push transaction' occurs when a customer pays directly by scanning a QR code or in other ways. Eliminating 'pull transactions' could reduce fraud cases, but some bankers are concerned that actual transactions might suffer too, which could reduce efficiency, according to an NDTV Profit report.
But NPCI, which operates India's retail payment and settlement systems, is yet to issue a comment on this move. The talks have only reached a nascent stage so far and the decision has not been finally taken yet, according to the report. At a time when UPI transactions are increasingly picking up steam back home, the move was unveiled. UPI transactions have more than crossed 16 billion so far in the month of February, and overall transaction value exceeded Rs 21 lakh crore during this period.
In 2024, UPI transactions jumped almost 46 per cent to a record 172.2 billion from 117.7 billion in 2023.
As the number of digital transactions has gone up, cases of cyber fraud have also increased. Scammers are employing new methods to trick individuals, causing financial losses and emotional trauma. The Reserve Bank of India (RBI) recently stressed the need for preventive awareness campaigns to make people aware of these scams. RBI statistics indicate that issues related to digital loans and payments continue to be a concern area.
During April to June of the ongoing financial year (FY25), the RBI Ombudsman received 14,401 complaints. In the subsequent quarter, between July to September, 12,744 complaints were received. The December 2024 Financial Stability Report noted that complaints concerning loans and digital payment means made up more than 70 per cent of the total complaints in the first half of the financial year 2024-25.
