This project presents a blueprint for creating a digital payment infrastructure (DPI) that could reduce the occurrence of fraud in digital payments and enhance customer trust. UPI-related scams may involve accessing sensitive user information, tricking users into making P2P transactions over Unified Payments Interface (UPI) apps/other digital platforms, or the exploitation of other system vulnerabilities to target user funds. Many scams are a result of authorised but unintended transactions where users, knowingly or unknowingly, authorise transactions to unintended parties due to deceit, manipulation, or system vulnerabilities. UPI scams are a result of ever-changing modus operandi that law enforcement agencies, banks, third-party app providers and online marketplaces have to deal with.
The project presents a set of solutions for the ecosystem of actors to consider in tackling and curbing the illegitimate activity of scamsters and other fraudulent actors over the very popular UPI of India. We uncover specific vulnerabilities at both product and system levels and recommend a multifaceted approach to mitigate risks, including user education, regulatory interventions, and technological innovations to safeguard users against scams.
The key proposal is to establish a DPI, a Comprehensive Fraud Reporting and Management System to facilitate efficient fraud reporting, investigation, and management (thought of as a stylised case for UPI alone but can be extended to encompass other payments systems as well). The proposed system optimises for three-level opportunities:
- Back-end coordination between all UPI-related scam reporting channels available to customers
- Identifying and collecting common data points as part of the Minimum Viable Information (MVI) by all scam reporting channels, which can then be used for verification of incoming complaints
- Providing visibility of the MVI collected by different channels to all other reporting channels and using these for intelligence creation and triggering of proportionate enforcement actions to mitigate UPI-related scams.
This project aims to catalyse a dialogue among policymakers, industry stakeholders, and the public to strengthen the UPI ecosystem against the evolving threat of retail financial scams. We hope that actions taken in this regard will set a new standard for protecting Indian citizens engaging in authentic transactions and find replication across countries that desire low-cost and secure digital payments at scale for their citizens.
