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The National Payments Corporation of India (NPCI) has started removing the “Collect Payments” feature from the Unified Payments Interface (UPI) platform in response to a growing number of fraud incidents, according to banking sources. This move seeks to safeguard users from scams while ensuring the continued growth of digital payments in India.
The “Collect Payments” feature, a pull-based payment method, allows merchants to directly request payments from users’ UPI apps. However, this feature has become a hotbed for fraudulent activities. Fraudsters have exploited it by pretending to purchase goods online and sending payment requests that users mistakenly approve, believing they are receiving money instead of sending it.
The Shift in Payment Methods: What’s Changing?
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According to banking officials, the transition will be phased in over time, allowing the ecosystem to adjust gradually. As this change takes effect, major UPI apps like Google Pay and PhonePe are likely to benefit, as more transactions shift toward these platforms. However, small merchants who rely on the pull-based system will need to adapt by implementing QR code systems, which can be accessed through payment aggregators.
What Does Undercode Say?
The NPCIs decision to phase out the Collect
This systemic issue was inevitable as digital payment methods expanded rapidly across India. With the sharp rise in online shopping and peer-to-peer transactions, malicious actors were bound to target the less secure areas of the platform. Pull transactions, which are not as transparent to users compared to push transactions or QR code payments, have become a prime target for fraud.
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QR code-based payments, which require less user interaction and are generally easier to verify, will likely become the dominant mode of transaction. This transition also promotes the use of push payments, where the payer initiates the transfer, reducing the risk of fraudulent pulls.
However, the transition will require some adjustment, particularly for small merchants who have relied on the ‘Collect Payments’ feature. Many of these merchants may struggle to adapt quickly to the new system, especially if they do not have access to advanced payment aggregators or the infrastructure needed for QR code-based payments.
Despite these growing pains, the long-term outlook for digital payments in India remains positive. Major UPI apps like Google Pay and PhonePe are already well-positioned to capitalize on this shift. With the added security, they may attract more users who had previously been hesitant to embrace the platform due to concerns about fraud.
Fact Checker Results
- Fact 1: NPCI is indeed phasing out the ‘Collect Payments’ feature due to rising fraud concerns.
- Fact 2: Pull-based transactions have been a common target for scammers, and the new cap of Rs 2,000 for person-to-person requests will help mitigate this.
- Fact 3: The transition to QR code payments and push transactions is expected to improve the overall security of UPI.
References:
Reported By: https://timesofindia.indiatimes.com/technology/tech-news/npci-is-making-a-big-change-to-upi-that-will-disable-the-feature-misused-in-a-large-number-of-upi-scams/articleshow/119158835.cms
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