One In Five UPI Users Fell Prey To Fraud In Last Three Years: Survey

As India witnesses a surge in digital payments, alarming new data shows that the rise in convenience has come with a spike in vulnerability.

A survey by LocalCircles reveals that one in five families using UPI experienced fraud at least once in the last three years and 51% of these users did not report it anywhere.

The survey, which gathered over 32,000 responses from 365 districts across India, paints a worrying picture. Among those who faced fraud, half said their UPI PIN or settings were hacked, while 40% admitted they clicked on a payment link expecting to receive money, only to have their accounts debited instead. Many experienced fraud in multiple ways, from QR code scams to impersonation by fake bank officials.

Despite the availability of complaint mechanisms, such as the Cybercrime Portal (1930), a majority of victims did not file any complaint — either due to lack of awareness, cumbersome processes or loss of hope in grievance redressal systems.

The UPI now accounts for 83.4% of India's total digital payment volume, recording a staggering 185.8 billion transactions in fiscal 2025, up 42% from the previous year. But this explosive growth has opened more doors for fraudsters. The RBI's annual report confirms this trend, noting that digital payment frauds, many of which involve UPI, formed 56.5% of all banking frauds, amounting to Rs 520 crore.

In response, regulators are ramping up their security arsenal. From daily transaction caps (Rs 1 lakh, with higher limits for education, tax and health) to AI-powered initiatives like MuleHunter.AI and the upcoming Digital Payments Intelligence Platform, the RBI is seeking to stem the tide of digital deception. Even internet domains like .bank.in and .fin.in are being rolled out to build user trust.

"UPI fraud is becoming a serious issue," the report states. It also recommends that telecom and OTT providers be tasked with using AI to detect and flag suspicious payment links sent via SMS or messaging apps.