India witnessed a staggering 6.32 lakh cases of UPI payment frauds worth ₹485 crore in the first six months, as per government data presented to Parliament by Minister of State for Finance, Pankaj Chaudhary. This alarming rise reflects the darker side of the country’s rapidly growing digital payments ecosystem.

The figures for FY24 paint an even grimmer picture, with 13.42 lakh cases of UPI fraud amounting to ₹1,087 crore, marking an 85% year-on-year (YoY) increase in incidents compared to FY23. The total amount involved in such cases surged by nearly 90% from ₹573 crore in FY23. This data, sourced from the Central Payment Fraud Information Registry (CPFIR), underscores the vulnerabilities in the system as digital transactions continue to proliferate.

Despite the rise in fraud, UPI continues to dominate India’s payments landscape, with 13,112 crore transactions worth ₹199.96 lakh crore in FY24. October 2024 alone saw 1,658 crore UPI transactions, representing a 45% YoY growth, with their total value reaching ₹23.5 lakh crore.

The market remains concentrated, with PhonePe, Google Pay, and Paytm collectively handling over 90% of UPI transactions, demonstrating their stranglehold on the ecosystem.

Amidst its domestic challenges, the NPCI is also expanding UPI’s global footprint. Its international arm, NPCI International, is in discussions with 10 countries to deploy the UPI and RuPay stack. India has already partnered with nations such as Sri Lanka, Mauritius, Bhutan, Nepal, the UAE, and Canada, showcasing the scalability and adaptability of its homegrown payment systems.

To address the escalating threat, the government has implemented several measures:

1. Two-Factor Authentication (2FA): A critical safeguard for preventing unauthorized access.
2. Daily Transaction Limits: Designed to reduce exposure to fraud.
3. AI-Powered Fraud Detection: The National Payments Corporation of India (NPCI) has deployed advanced AI-driven tools to help banks detect and block fraudulent transactions.
4. National Cybercrime Reporting Portal: A centralized platform for reporting financial frauds.
5. “Chakshu” Facility by DoT: An initiative under the Sanchar Saathi portal to report suspicious communications through SMS and WhatsApp.

These steps aim to bolster trust in the digital payments framework while curbing fraud.