NPCI chief advocates for stronger legal systems to deter cyber frauds
Mumbai, Feb 5, 2025
The apex payments body head pressed on the need for economic incentivisation for firms processing UPI
A strong legal framework coupled with adequate customer awareness is needed to deter growing financial cyber frauds and prevent people from engaging in such crime, said Dilip Asbe, managing director and chief executive officer (CEO), National Payments Corporation of India (NPCI).
Speaking at the Bharat Fintech Summit in Mumbai, he said that economic incentivisation was required to expand the base of customers using India’s real-time payments system Unified Payments Interface (UPI). Currently, over 450 million users utilise digital payment methods such as UPI for retail payments.
“The legal system also must be evolved to ensure that these activities are penalised at the appropriate level. We see that 95 per cent frauds are consumer initiated frauds, investment-related frauds. It is important to make citizens aware about these at a large scale,” Asbe said. His comments come at a time when digital payments frauds have continued to drain the wallets of users.
Indians have lost Rs 485 crore to UPI-related frauds in 632,000 reported incidents until September in the ongoing financial year (FY25), according to data from the Ministry of Finance. Since 2022-23, UPI-related frauds have accounted for a cumulative loss of Rs 2,145 crore across 2.7 million reported incidents. In 2023-24 (FY24) alone, 1.34 million fraud cases were reported, amounting to losses of Rs 1,087 crore.
The rise in UPI-related frauds coincides with the growth in the number of users and the total transactions processed on the real-time payments system. In 2024 alone, the NPCI recorded over 172 billion transactions on the real-time payments system.
“We have the potential to process 100-150 billion transactions (every month). How do we grow now? If you want to bring in the 300-400 million people who are not digitally savvy onto the digital platform, there has to be some incentivisation,” Asbe said.
Currently, there is no merchant discount rate (MDR) on UPI payments. MDR refers to a fee that merchants pay to payment processing companies for processing a transaction. Debit transactions made on UPI continue to remain free and banks along with fintechs bear the costs of processing these payments.
The Union Budget 2025 too was muted on digital payment subsidies that trickle down to banks and financial technology (fintech) firms. The government slashed the financial year 2026 (FY26) outlay for promoting peer-to-merchant (P2M) UPI transactions and RuPay debit card payments.
The Centre allocated just Rs 437 crore in the Budget for the promotion of these types of transactions. This was a 78 per cent cut from the final outlay of Rs 2,000 crore allocated for FY25.
Asbe elucidated that investments in technology and consumer education awareness were a continuous process. “The use of tech can identify the early trends in terms of future potential risk. How do you continuously remain vigilant and make over and above investments which are required to ensure that the trust in the payment system is protected?” he asked.
[The Business Standard]
