ETtech Explainer: How the rise in online payment frauds pushed NPCI to kill ‘pull' transactions

Time of India

21 hours ago

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From October 31, you may not be able to request someone to pay you through the Unified Payments Interface (UPI). The National Payments Corporation of India ( NPCI is shutting down this 'pull' transaction service , due to the proliferation of fraud cases , sources told ET.Let's understand what this means and why it is happening.A push UPI transaction is when the user or payer sends money to someone else through apps such as Google Pay, PhonePe, Paytm, or BHIM by scanning a QR code, entering their UPI ID or their phone number. The person then chooses an account, adds the amount, and confirms it with a UPI PIN. The transaction is initiated and authorised only by the sender.A pull transaction, which goes by 'collect' or 'request money' on some apps, is initiated by the recipient, who sends a payment request. The payer receives a notification asking for approval of the payment. This feature has sometimes led to confusion or enabled manipulation.NPCI has sent a communication to banks and fintech firms that it is removing the feature. It had capped the pull method at Rs 2,000 per transaction in 2019, to reduce the risk of unauthorised transactions.The payments body said it aims to curb the growing threat of UPI-related scams. Most frauds are linked to the pull method, where unsuspecting users approve unauthorised payment requests, resulting in financial losses. Fraudsters frequently exploit the feature by sending deceptive requests.Other UPI frauds include QR code scams, phishing via messaging and social media apps and fraudsters posing as bank or support representatives.According to Reserve Bank of India data, frauds related to payment cards and internet banking more than doubled to 29,000 in FY25, involving about Rs 1,457 crore. There were 13,516 such attacks, involving Rs 520 crore, in the previous financial year.Peer-to-peer (P2P) transactions accounted for 7.08 billion transactions worth Rs 17.74 lakh crore, up from about 5 billion a year ago. There are ongoing discussions about the cost of processing UPI transactions. Some banks have begun levying charges on certain UPI payments after the government reduced incentives for processing small-value merchant transactions.