How to prevent UPI fraud in India?

Abstract

In India, Government receives around 61,000 reports of fraud every month, and half of them about 33,000 are related to the Unified Payment Interface(UPI).
According to data sources, 42% of Indians experienced financial fraud in the last three years.

This raises a moral question about the existence of UPI as an easy payment method or a tool to exploit.

What to do?

There are three significant things that can be done

1. Visual Changes
2. Central Fraud reporting API
3. Making reporting fraud seamless

Visual Changes

A list of some visual changes that can be added to the current UPI interface :

1. Differentiate send and receive screens.
2. Provide real-time fraud scores in the interface.

Central Fraud reporting API

1. Send fraud report link in each transaction SMS.
2. Provide API to report fraud to all banks, NBFC( Non-Banking Financial Company), and UPI apps.
3. Make the database of all fraud accounts, bank branch details, UPI details, PAN(optional), and Contact details.
4. Maintain fraud score of every account
5. Withheld balance and reverify in case of fraud suspect.

Making reporting fraud seamless

1. Send area-wise fraud reports to authorities every day for Accounts and Banks branches.
2. Issue warnings in case of predefined limits and block accounts when the final limit is crossed.