NPCI is shutting down these QR code-based UPI transactions starting October 1
The government may have a new plan to curb Unified Payments Interface (UPI)-related scams. According to an Economic Times report, the
National Payment Corporation of India
(NPCI) is shutting down recipient-initiated person-to-person (P2P) digital payments, also known as 'pull' transactions. Quoting people familiar with the matter, the report says that the development will come into effect from October 31. NPCI has informed banks and fintech companies about the decision, the report added.
As per industry insiders quoted by ET in its report, P2P pull transactions account for only about 3% of UPI activity, making it easier for NPCI to withdraw the feature.
What is UPI Pull transaction feature
A UPI pull transaction, also called a collect request, is a type of payment where the recipient starts the transaction instead of the sender. Once the payment request is initiated, the sender approves it by entering their UPI PIN.
However, the payment method has become an increasingly misused payment tool used by fraudsters to dupe innocent citizens.
How QR code-based UPI payments method is used by fraudsters
Fraudsters exploit the UPI pull payment method by taking advantage of people who don't fully understand how it works or who act in haste. In many cases, the scammers pretend to send money for something like an online sale or a refund. But instead of making a normal push payment, they send a collect request to the victim's UPI ID. Once the victim enters their UPI PIN to approve it, the money is sent to the fraudster.
Scammers also pretend to be merchants or service providers and send a pull request disguised as a payment confirmation link. People who are in a hurry or feel pressured often do not notice the details and authorise the payment.
NPCI capped UPI pull payments to Rs 2,000
In 2019, NPCI had capped such transactions at Rs 2,000 in 2019.
'In the initial days, this feature was designed with the thought that friends splitting a bill can send pull payment links after the party, just to be approved by the other person,' a senior fintech industry executive told the publication. 'However, there are a lot of frauds happening in such payments, where fraudsters take money from gullible consumers in the garb of actually sending money,' the banker added.
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