UPI Payments Could See New Limits As NPCI Targets Fraud-Prone Features — Here's What Could Change

NPCI is weighing changes to the Collect and Autopay features on UPI after concerns about misuse in fraudulent transactions, according to people familiar with the matter. The move targets merchant-initiated requests and subscription payments that have drawn scrutiny over customer losses.

NPCI has told payment aggregators to prepare for a selective phase-out of the Collect feature for the “person-to-person merchant” category, the people told NDTV Profit. The step is intended to curb the use of Collect for recurring collections by merchants. Sources said that the NPCI also plans to reinforce stricter display rules for Autopay so customers can clearly see and approve subscription-based payments.

Collect is a payment tool that lets merchants initiate a request for funds rather than customers starting the transaction. Autopay supports recurring payments for bills and subscriptions. Payment aggregators serve as intermediaries between customers and merchants.

Payment aggregators told NDTV Profit, on condition of anonymity, that unclear display formats have contributed to financial losses for customers. They expect the Collect function to shift towards intent-based and QR-based transactions. They added that small merchants may feel the impact of the Collect withdrawal in the specified category, but restricting it could reduce fraudulent charges. Clearer Autopay displays may also limit unintended long-term subscription approvals.

NPCI, PayTM, Pine Labs, and MobiKwik did not comment on NDTV Profit’s queries.

Addressing the impact on listed entities, Ranadurjay Talukdar, Partner and Payments Sector Leader at EY India, said the selective sunsetting of P2P Collect is not expected to materially hurt companies such as Paytm, Pine Labs and MobiKwik. He said P2P Collect has not been a major revenue driver and that these businesses earn mainly from merchant payments, value-added services, subscriptions, lending and POS solutions, which remain unaffected.

Talukdar noted that formal merchants are unlikely to face disruption because QR payments and merchant Collect options continue, though smaller merchants who rely on P2P Collect may face short-term adjustments before shifting to QR and push payments.

Vinit Bolinjkar, Head of Research at Ventura Securities echoes the same sentiment.

"Actually, we don't see too much impact on the transactions. You know, there are a lot of initiatives taken by the merchants to ensure that. We do not see too much impact of all this happening. And we think that the growth story will continue from here," he said.

On fraud, he said restricting merchant-initiated Collect requests could close a common social-engineering route used to trick customers into approving payments, which would improve trust and reduce confusion even though it may not remove all fraud risks.

NPCI, PayTM, Pine Labs and MobiKwik did not respond to NDTV Profit’s queries.