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UPI Payments: Top Security Issues & Possible Way Arounds: An Opinion

Blog: NASSCOM Official Blog

Unified Payments Interface, popularly known as the UPI, has been one of the most thrilling inventions in India’s digital payments landscape over the last few years. It is India’s home-grown instant real-time payment system developed by NPCI, regulated by the RBI, and facilitating contactless inter-bank transactions over a mobile platform.

One of the best things about UPI is that it is a single interface that allows seamless interoperability between different payment systems across payment providers, attempting to build a truly digitally connected country.

UPI’s key market success factors:

UPI has some key market success factors that can be attributed to it being revolutionary in true terms. Some of these success factors and key benefits of UPI include:

Even though UPI is indeed a groundbreaking innovation in the digital payments landscape, reliability and security are still considered to be at stake, keeping many individuals and businesses apprehensive about the payment system.

According to recent research, with the onset and the rise of Covid-19 in India, nearly half of the Indian consumers are more concerned about digital payments fraud now than when the novel coronavirus first emerged.

Certain security parameters that are at stake with the use of UPI for digital payments include the virtual payment addresses of the individuals, the digital identity of individuals, transaction information – the data over the UPI network, and the financial details of individuals that increase susceptibility to financial frauds.

Some of the Top UPI payment frauds doing rounds in India include:

Digital literacy and educating individuals on the UPI payment methodology is indeed key in preventing users from falling prey to many of such frauds and the Indian government is regularly working on increasing awareness among the individuals.

Besides this, many fintechs are also working to innovate newer Ways of Securing and Authenticating UPI payments in India. Some of the possible innovative ways in which UPI payments can be made more secure in India:

Adding on voice, finger, or face biometric authentication by validating the user’s voice/face with pre-saved audio/pic samples can be a breakthrough in enhancing the security of UPI payments in India.

In 2019, Google Pay had launched fingerprint or face biometric API authentication in some countries, but the feature is not currently available in India. In India, the UPI based Google Pay platform still requires pin-based authentication only.

GPS tracking is enabled by most smartphones in India today and some banking apps have already started requiring location tracking to be enabled to complete transactions, as a fraud prevention mechanism on UPI payments.

With NPCI’s recent launch of PayAuth Challenge, inviting proposals for innovative solutions to simplify and secure authentication on the UPI platform, the security of UPI payments is sure to be enhanced in the coming months, possibly making it one of the most sought after payment methods in India.




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