Red Flags in Upi (unified Payments Interface): a Study on Digital Payments in India

Abstract:

The advent of UPI in India to ease transactions and turn the economy to become almost a cent percent cashless, has seen a huge success ever since its inception about 9 years ago. Indians, on average. conduct about 50-100 transactions per head in a week (or 650M+ transactions in a day3), be it to buy a milk packet or pay their monthly insurance premiums. Along with this ease comes a lot of chances for fraudsters to develop new modus operandi to commit financial fraud. This paper aims to shed light on the red flags that exist within the UPI system in India which also poses as the primary objective of the research. The secondary objectives are to pinpoint and categorise the factors that contribute most significantly to fraud, to compare the traditional electronic payments systems with UPI in terms of security, and to establish user specific insights via primary data collection. The data collection methodology was ‘a questionnaire’ that heavily relied on studying user behaviour and patterns about digital payments as well as stakeholder mapping (of sample units including CAs, Academicians, Cybersecurity professionals & ordinary citizens). The findings of the research include (but are not limited to) citing reasons behind the majority of fraud, work out targeted recommendations to reduce the red flags (& occurrence of fraud) that go unnoticed in the UPI system and do a parallel study of the mobile payments guidelines of India, EU and USA. Future scope of the study may include in-depth studies that cover the technical vulnerabilities that nudge the user towards falling victim to fraud. However, it is out of scope for the current study to cover any other kind of sophisticated digital fraud