NPCI Engages with Banks to Eliminate 'Pull Transactions' on UPI to Combat Digital Fraud

Key Takeaways

NPCI is considering removing 'pull transactions' to reduce fraud.
Pull transactions involve merchants requesting payments from customers.
Concerns exist regarding the impact on legitimate transactions.
UPI transaction volumes have surged significantly.
RBI emphasizes the need for public awareness on digital fraud.

Mumbai, March 18 (NationPress) In a bid to tackle the increasing issue of digital fraud, the National Payments Corporation of India (NPCI) is reportedly initiating preliminary discussions with financial institutions to phase out 'pull transactions' from the Unified Payments Interface (UPI).

Most fraudulent activities are occurring through the pull method, prompting NPCI to consider the complete removal of this feature to mitigate fraudulent incidents.

A 'pull transaction' occurs when a merchant issues a payment request to a customer, whereas a 'push transaction' takes place when a customer initiates the payment directly via a QR code or other methods.

Eliminating 'pull transactions' may lead to a reduction in fraud cases; however, some bankers express concerns that legitimate transactions might be negatively impacted, which could affect operational efficiency, as reported by NDTV Profit.

Despite the ongoing discussions, NPCI, which manages retail payment and settlement systems across India, has yet to release an official statement regarding this matter.

The talks are still in the early phase, and no final decision about implementation has been reached, according to the report.

This move comes at a time when UPI payments are experiencing significant growth within the nation. In February alone, UPI transactions surged past 16 billion, with the total transaction value exceeding Rs 21 lakh crore.

In 2024, UPI transactions witnessed a remarkable increase of nearly 46 percent, reaching an all-time high of 172.2 billion, compared to 117.7 billion in 2023.

As digital transactions proliferate, incidents of cyber fraud have also escalated. Fraudsters are employing innovative tactics to deceive individuals, resulting in financial losses and emotional turmoil.

The Reserve Bank of India (RBI) has recently underscored the necessity of proactive awareness programs to inform the public about these scams.

Data from the RBI indicates that grievances related to digital payments and loans continue to be a significant issue. Between April and June of the current financial year (FY25), the RBI Ombudsman recorded 14,401 complaints.

In the subsequent quarter, from July to September, 12,744 complaints were documented. The Financial Stability Report for December 2024 pointed out that complaints regarding loans and digital payment methods constituted over 70 percent of all grievances in the first half of the 2024-25 financial year.