The Indian government is collaborating with third-party UPI applications like Google Pay, PhonePe, and Paytm to develop advanced real-time fraud detection mechanisms to bolster digital payment security. The new framework, currently under active discussion, aims to block suspicious peer-to-peer (P2P) and person-to-business (P2B) transactions before they are completed.

According to a Business Standard report citing sources familiar with the initiative, the primary objective is to reduce fraudulent activities on UPI platforms, especially those targeting individuals with limited digital literacy. The authorities believe that improving transaction security, even at the cost of a few extra seconds in processing time, is a necessary trade-off.

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Delays by Design: New Safety Protocols Incoming

To enhance security, UPI platforms may implement minor delays for transactions, issue fraud warnings, or request additional user confirmations for transactions that appear suspicious. These measures are designed to serve as speed bumps for scammers and alert less tech-savvy users to potentially risky actions. “We’re leveraging every signal available to us,” an official from the Ministry of Electronics and Information Technology told Business Standard. “Although this is still in the early stages, the government is optimistic about establishing a robust solution that can significantly curb fraud on UPI platforms.”

Apps Now Categorizing Users by Risk Levels

In line with these efforts, leading UPI apps have already implemented risk-based frameworks. This allows them to assess each user's financial activity and categorize them into risk tiers—medium, high, or very high. Based on this classification, the platforms can proactively limit, flag, or block transactions deemed too risky. The push comes amid growing concerns over scams and digital frauds that exploit the speed and simplicity of UPI transfers. As usage surges across urban and rural regions alike, regulators are increasingly prioritizing mechanisms that balance convenience with user protection.

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A Safer Future for UPI Transactions

While these changes might slightly slow down how quickly money moves via UPI, the intent is clear: protect users, especially the vulnerable, from falling prey to fast-moving digital cons. With the government and platforms now working in tandem, a more secure UPI experience may soon become the norm—even if it asks you to pause and confirm just a bit longer.