Frauds In The Digital Payment Ecosystem

A friend of mine wanted to sell a fridge of hers, for which she put up an ad online. Within a few hours, she found a buyer who was willing to make the purchase, offering to pay via a digital payment app. However, when she opened the link that was sent to her, she realized that the amount would be debited from her account instead of being credited. The buyer continuously spammed her with calls and even had the nerve to threaten her saying that he would call the police on her claiming that she is trying to fraud people with the hoax of her fridge if she did not complete the payment.

A lot of us have heard of similar stories from the people around us. Payment fraud has become an uprising issue in the digital payment industry and a growing concern for consumers. While digital payments have seen massive growth, which according to RBI data, have grown at a compounded annual growth rate of 55.1 percent between 2015–16 and 2019–2020. The pandemic due to Covid 19 has helped accelerate the change from cash payments to digital payments. More consumers are switching to digital modes of payments for their simple day-to-day activities such as grocery shopping, paying electric or phone bills, and other essential products. This also provides a bigger market for fraudsters to scam consumers.

“Consumers expect a safe, convenient and affordable globalized payment platform.”

Lucy Peng

When we talk about safety that a consumer expects, there are two types of safety. The first is physical safety. With Corona spreading so quickly on contact, customers had to adapt to contactless and digital payments. The second safety is that of payment safety which can occur when one is not aware of the technology and its workings. Frauds have become more common due to the following reasons:

  • Customers are more vulnerable to scams as they are shifting to new modes of payments and are asked to rely on third parties.
  • Due to the increase in demand and shortage in supply, customers are less cautious with the acquisition of the products.

The most frequent forms of fraud are:

UPI pin and OTP scam:

The hacker first sends a ‘request money’ link to the user. The receiver then proceeds to click on the link to authorize the transaction with the notion that they will be receiving the amount. However, instead of having the amount credited, it is debited from their bank account. In the case of an OTP which is shared on the user’s phone number (or UPI Pin), the fraudster convinces their victim to share the details with them and then authenticate the transactions for their benefit.

Phishing scams:

In the case of a phishing scam, the fraudster sends a link that looks identical to the original URL but is an unauthorized payment link via message. When the victim clicks on the link, that will take you to your UPI app and ask the victim to select their preferred app from which the amount will be auto-debited. A fake URL could differ from just a character or punctuation. For example, will be a different website from

Bringing awareness to consumers is the biggest game-changer that can be there in this fight against fraud. Currently, the issues that are being faced are due to this lack of awareness. Vigilance and digital literacy, which can prove to be our defense against digital fraud. Initiatives are beginning to be taken by digital payment companies and the government. Digital payments promise to be the future of payments, stay tuned to know how we can make these payments secure!



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