UPI Frauds: What is UPI? How to Prevent UPI Frauds?

Unified Payments Interface or UPI has gained immense steam over the past few years, with the concept of payment cards becoming virtually obsolete. With its rising popularity, incidences of UPI frauds are also increasing rapidly.

It is imperative to understand what is UPI, the significance of the concerning virtual address, and how fraudsters are operating within this system to scam users of their savings.

What is UPI Address?

The UPI address is a virtual identifier unique to a user. UPI IDs follow a similar structure – username@bank’s initials. It lets the interface track all the monetary transactions or UPI payments a user undertakes through that ID. To that end, it is also essential to understand what is UPI payment.

UPI payments run the entire gamut of transactions individuals usually carry out via their savings accounts using net banking apps or debit cards. It includes bill and merchant payments and money transfer from one saving account to another without disclosing the account details.

Why is UPI Needed?

During any UPI payment, only a user’s virtual address is necessary as opposed to net banking, where one needs to share details like account number and IFSC. Since the UPI ID does not contain sensitive account details, it mitigates the risk of frauds.

Speedy transaction is another valuable feature of what is UPI. This interface utilises Immediate Payments Service or IMPS. As the name suggests, IMPS facilitates instant money transfer, unlike the traditional NEFT and is functional 24x7.

How to Set up UPI?

Follow the steps mentioned below to set up a UPI ID –

  • Step 1 - Download a UPI-enabled app from the Apple App Store or Google Play Store.
  • Step 2 - Select a preferred language to proceed.
  • Step 3 - Choose the number registered with the savings account you want to link.
  • Step 4 - Enter the OTP sent to the mobile number to authorise.
  • Step 5 - Link the savings account by adding necessary details like A/c no.
  • Step 6 - Input a PIN, which will be used to authorise nearly all future UPI payments.

Following this, your account will be registered.

However, caution should be exercised concerning UPI frauds once you begin online transactions using your unique VPA.

How to Prevent UPI Payment Fraud?

UPI frauds in India are increasing at an alarming pace, with nearly 41% of the cases being reported from eastern Indian states. Phishing, phony accounts and apps, payment requests, and usage of PIN and OTP are the top UPI-related frauds.

Follow this list of do’s and don’ts to avoid falling prey to UPI scams –

Scan UPI IDs carefully

Fraudsters often create UPI IDs resembling credible addresses, which they circulate via various means. Such IDs usually look similar to those of relief donation campaigns but can target other categories as well. Look up the actual address on the internet to avoid UPI ID frauds of this sort.

Beware of payment requests when selling

Businesspersons or online sellers may receive payment requests on a UPI-enabled app from supposed customers with the prompts “Pay” and “Decline”. One of the most popular UPI scams is when a counterfeit customer asks a seller to click on the “Pay” option to receive payment.

Do not share UPI PIN or OTP

Scammers misuse the payment request option in UPI-enabled apps to source the PIN or OTP necessary to authorise a transaction. They initiate a payment request and accordingly contacts the individual to ask for the OTP or PIN, which they say is needed on their end to complete a transaction. However, the user needs to input an OTP or PIN to authorise a payment and not the other way around.

Don’t open unsecured links or download questionable apps

Fraudsters can also create fake websites or apps as a means of UPI frauds. Scammers share such links via SMSs, wherein if you click, it redirects you to a UPI-enabled app with a prompt for payment.

When opening links, check whether it features the lock sign. In the case of apps, check if those are verified by Google Play Store or Apple App Store.

These are a few UPI fraud prevention tips individuals must keep in mind before engaging in online transactions. Besides knowing what is UPI, this understanding can go a long way into ensuring individuals safely carry out their transactions. Also, availing dedicated insurance policies can help minimise the financial liabilities that might arise due to UPI payment frauds.

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