In a bid to tackle the growing issue of digital frauds, the National Payments Corporation of India (NPCI) is reportedly holding discussions with banks to eliminate ‘pull transactions’ on the Unified Payments Interface (UPI). This move aims to reduce fraudulent activities that are increasingly affecting users of digital payment platforms.
What is a ‘Pull Transaction’?
A ‘pull transaction’ occurs when a merchant sends a payment request to a customer, allowing them to approve the payment. This is different from a ‘push transaction,’ where the customer initiates the payment, typically by scanning a QR code or using other payment methods.
Why NPCI Wants to Remove ‘Pull Transactions’
According to sources, the ‘pull transaction’ method has been linked to a significant number of digital frauds. Fraudsters often exploit this feature to deceive users into making payments for goods or services that are either non-existent or illegitimate. By removing this feature, NPCI believes it can reduce the chances of fraud occurring.
However, some bankers have raised concerns. They fear that eliminating ‘pull transactions’ could impact genuine transactions, which may lower the overall efficiency of the UPI system.
Status of the Discussions
Currently, the discussions about removing pull transactions are still in the early stages, and no final decision has been made regarding the implementation of this change. NPCI, which operates India’s retail payment and settlement systems, has not officially commented on the development.
UPI’s Growing Popularity Amid Rising Fraud Cases
This development comes at a time when UPI is becoming increasingly popular in India. In February 2024, UPI transactions surpassed 16 billion in number, with the total transaction value crossing ₹21 lakh crore. Over the past year, UPI transactions grew by nearly 46%, reaching a record 172.2 billion transactions in 2024, compared to 117.7 billion in 2023.
With this surge in digital transactions, however, comes an increase in fraud cases. Fraudsters are using advanced methods to exploit unsuspecting users, resulting in financial losses and emotional distress.
RBI’s Focus on Preventive Awareness
In response to the rise in digital frauds, the Reserve Bank of India (RBI) has emphasized the need for preventive awareness initiatives to educate the public about these scams. RBI data reveals that complaints related to digital payments and loans continue to be a significant concern.
Between April and June 2024, the RBI Ombudsman received 14,401 complaints. In the next quarter, from July to September, this number dropped slightly to 12,744 complaints. The Financial Stability Report for December 2024 indicated that issues related to loans and digital payments accounted for over 70% of the complaints in the first half of the 2024-25 financial year.
Conclusion
As digital transactions continue to grow in India, NPCI is working towards improving security on UPI. Removing pull transactions could be a significant step in reducing fraud, but the discussions are still ongoing, and the final decision has yet to be made. In the meantime, it is essential for users to stay vigilant and stay informed about potential scams.
