UPI Collect Call Transactions will be Phased Out by NPCI

To combat growing online fraud, the National Payments Corporation of India (NPCI) plans to gradually phase out collect phone transactions for merchant payments on the Unified Payments Interface (UPI). By lowering the possibility of illegal fund withdrawals, this ruling attempts to minimise fraudulent transactions in which retailers ask for payments from clients. Through their UPI app, retailers can begin payment requests that customers confirm through a collect call transaction, commonly referred to as a pull payment. However, scammers are increasingly using this technique to trick customers into approving illegal payments by fabricating websites or businesses. In order to improve security, NPCI is concentrating on push transactions, which lower the chance of fraud by allowing users to initiate payments on their own by manually entering merchant information or scanning QR codes.

Significant Shifts in UPI Transactions as Collect Call Payments Fall

In February 2025 alone, UPI processed 16 billion transactions, 10 billion of which were merchant payments, making it the most popular digital payment mechanism in India. UPI transactions have increased by 46% in the last year, from 117.7 billion in 2023 to 172.2 billion in 2024. Notwithstanding this expansion, collect call transactions—in which retailers ask clients for money—are declining in frequency. Direct UPI connections through payment service providers are becoming more popular among big organisations and e-commerce platforms. According to industry experts, collect phone transactions currently account for fewer than 3% of all merchant payments. Peer-to-peer (P2P) transactions are less common because NPCI has already capped pull transactions at INR 2,000 per request.

Additionally, less than 3% of all UPI payments are made using these transactions, indicating a move towards safer payment systems where users start the transfer on their own. Banks are currently advocating for the reinstatement of the Merchant Discount Rate (MDR) on RuPay and UPI debit card transactions due to modifications in UPI security. To encourage the use of UPI, MDR, a nominal fee assessed to companies for handling digital payments, was previously eliminated. MDR may have an impact on small firms that presently benefit from free digital payments if it is reinstated, perhaps raising the cost of UPI transactions for them. In order to ensure the security of UPI payments, NPCI is developing new methods to check businesses as collect call transactions become outdated. The specifics of these new regulations are still being worked out, but they may force banks and payment service providers to perform more stringent background checks on companies.

India Sees a Sharp Increase in Digital Payment Fraud

Digital payment fraud has grown significantly, according to data from the Reserve Bank of India (RBI), which shows a dramatic rise in scam instances. According to a Business Standard report, 13,133 fraud instances involving cards and digital banking were registered in the first half of FY25, resulting in losses of INR 514 crore. Over 29,000 occurrences of digital banking scams occurred in FY24, and scammers stole an incredible INR 1,457 crore. By deceiving clients into approving payments for services or goods that do not exist, fraudsters frequently take advantage of pull transactions. Many smaller retailers continue to evade know-your-customer (KYC) verification, which makes fraud easier to carry out, in contrast to major online retailers like Flipkart and Amazon, which interface with regulated payment aggregators like PhonePe and Paytm.