Fighting Fraud in Real Time: Govt Collaborates with Google Pay, PhonePe, Paytm

In order to detect and prevent transaction fraud, the central government is collaborating with Third-Party Application Providers (TPAPs) such as Google Pay, PhonePe, and Paytm to create improved security measures.

The initiative's goal is to stop fraudulent transactions using TPAPs. TPAP systems may cause minor delays and send out fraud alerts in order to facilitate this.

According to reports, the Centre is collaborating with third-party UPI apps like Google Pay, PhonePe, Paytm, and others to put in place improved security features that can instantly identify and stop questionable P2P and P2B transactions.

The campaign aims to reduce fraudulent transactions conducted through TPAPs, specifically targeting schemes that impact consumers with lesser levels of digital literacy, according to a media report that cited persons familiar with the situation.

Enhancing Security Checks

The government's measure is intended to make sure that all transactions—regardless of their value—are subject to more stringent checks and balances, even if they take a few more seconds.

Platforms like Google Pay, Paytm, and others may purposefully create small delays, send fraud alerts, and ask customers for more confirmation before completing transactions that seem suspicious in order to make this easier.

A representative of the IT ministry informed a news outlet that the administration is using every signal it can. Even though it's still early, the government hopes to find a tangible way to significantly reduce payment fraud via UPI apps.

Additionally, according to the official, Google Pay, PhonePe, and Paytm have implemented a risk-based strategy that enables them to limit or prevent transactions for individuals who are categorised as having medium, high, or extremely high financial risk.

According to a TPAP executive, they have collected enough signals to identify potentially dangerous transactions with the aid of artificial intelligence.

Online Payment and Bank Frauds on the Rise in India

Despite a sharp reduction in the number of reported cases, the Reserve Bank of India (RBI) recorded a sharp increase in the value of bank frauds for the fiscal year 2024–2025.

Across Indian banks and financial institutions, 23,953 fraud instances of INR 36,014 crore were reported; this represents an almost threefold increase in value compared to INR 12,230 crore the year before.

The categorisation of 122 fraud cases from previous years, valued at INR 18,674 crore, which were re-reported after a Supreme Court ruling in March 2023, is mostly to blame for the increase.

The majority of losses resulting from fraud were still borne by public sector banks (PSBs). Even while they reported fewer frauds than private lenders (6,935 incidents versus 14,233), the total amount involved was far larger, at INR 25,667 crore, or 71.3%.

Nearly 60% of all fraud cases involved private sector banks, which claimed losses of INR 10,088 crore. Although they continued to be modest participants in terms of fraud value, foreign banks, small finance banks, and payments banks consistently increased the number of instances.