New Delhi:Â The National Payments Corporation of India (NPCI) is testing Artificial Intelligence (AI) and Machine Learning (ML) tools to improve security in digital transactions amid growing concerns over fraud in Unified Payments Interface (UPI) payments.
NPCI Chief Risk Officer Viswanath Krishnamurthy said the pilot study is being conducted in partnership with public and private sector banks.
AI to Detect and Prevent Fraud
With UPI transactions reaching 18.3 billion in March alone, marking a 36 per cent year-on-year rise, NPCI is looking for ways to curb fraudulent activities. The transaction value stood at approximately Rs 24 lakh crore, a 25 per cent increase from last year. UPI’s rapid adoption, especially in smaller cities, has led to increased efforts in fraud prevention.
Krishnamurthy pointed out that fraudsters manipulate customers using psychological tactics like greed, fear, or ignorance. He said about 85 per cent of victims fall for scams due to greed, 10% due to fear, and 5 per cent due to lack of awareness. Even experienced professionals, including CFOs and IT heads, have been targeted.
To address this, NPCI is working on an alert system that warns users before transferring money to accounts flagged as fraudulent by other users.
Growing UPI Adoption and Awareness Initiatives
Since its launch, UPI has onboarded over 460 million unique users, making it India’s largest retail payment system. To improve awareness, NPCI has increased its budget for educational campaigns. Krishnamurthy said that budget allocations for promoting digital payments rise annually.
While NPCI is expanding UPI’s reach within India, its international wing, NPCI International, is operational in seven countries, with more nations expressing interest in adopting similar payment systems. By integrating AI-driven security measures, NPCI aims to balance convenience and safety in digital transactions, ensuring that users remain informed and vigilant.
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