UPI has grown to become a primary digital payment system in India. Today, it is pretty common to see people taking out their phones to scan a QR code to pay for a product. It is as simple as that. With more than 260 banks active on the UPI platforms, it provides a seamless fund transfer experience irrespective of the bank they work with. UPI integrates several bank accounts and payment features into one mobile application.
With its easy user interface, merchants have started incorporating UPI payment gateway systems into their businesses to convert more customers through manageable payment options. But, at the same time, creating a security layer to prevent digital frauds executed through such gateways is also essential. Here are some ways to avoid UPI fraud.
The Virtual Payment Address, or VPA, is a unique identifier associated with UPI accounts. It determines the sender and the receiver’s account, just as a bank account number. However, it is different from the bank account number the UPI application is associated with and gives the user a unique address in the network. However, fraudsters have come up with a way to make money unethically by creating accounts with VPA that resemble popular accounts and naturally receive a high volume of transactions. Therefore, the general masses consider the fake VPA authentic since they closely resemble the popular VPAs. Usually, the difference is between one or two characters.
Merchants need to be aware of this and verify the VPA from which they receive funds and report in case they seem suspicious. They must also check for fake VPA’s similar to theirs being circulated in the market. The best solution to avoid such a situation altogether is to use Zaakpay’s digital payment system, which helps merchants avoid publicly revealing their VPA.
Just as ATM transactions are authenticated by the PIN of the debit or credit card, UPI transactions are shown using a passcode called MPIN. It is an excellent preventive tool because it prevents anyone who gets hold of the phone from using the UPI application and protects a user against request fraud. Request fraud is a common UPI fraud where the miscreant while pretending to be a customer, sends a fund request to the merchant rather than depositing funds. In simple words, the miscreant uses a facility to generate a fund transfer where the miscreant is the receiver and the merchant, the sender. They convince the merchant of the exact opposite.
To make a payment, the system asks the merchant to enter the MPIN to receive the money. However, this is a direct tell-tale sign of fraud as an MPIN has to be entered only while making a payment and not when receiving it. Sadly, many merchants lose money only because they don’t know when to enter an MPIN and when not. Therefore, one must remember that MPIN should not be entered unless a payment is made and not received. A digital payment system is also helpful in preventing this because a fund request cannot be sent there.
The menace of scam calls was on the verge of declining as the public became familiar with their antiquities. With the advent of UPI, however, they have found new ways to wreak havoc. Scam calls related to UPI usually comprise KYC calls or lotteries. KYC, or know-your-customer, is a process that banks use to verify their customers. Scammers attempt to get hold of the customer’s VPA, MPIN, bank, or card details, pretending to be a bank agent calling for the KYC process. To protect against such scams, merchants must not entertain any calls related to the KYC process without verifying its authenticity with the bank in person.
Calls related to winning a lottery are also common. Primarily targeted to small traders, the scammers convince them to have won a lottery followed by a simple request fraud, as mentioned above. Not responding to any such unauthenticated claims is the best way to avoid them.
Checking the authenticity of UPI applications and banking websites before entering any personal details is essential. Scamsters build authentic-looking websites that collect sensitive information from users the moment they enter their details. Similarly, merchants should not trust any random UPI payment gateway for payments. Security seals and reviews must be checked thoroughly before integrating the gateway service. A shady gateway can damage the business’ reputation, and merchants must opt for credible gateway companies like Zaakpay to prevent such a blot on their business.
Even screen-sharing applications are a threat to security. Many times, fraudsters make merchants install such an application. These applications can become a portal to the merchant’s device from where essential business data and the customers’ sensitive payment details can be hacked. Therefore, it is crucial to check the type of applications installed on the business computers.
Taking a strong stance against UPI payment fraud today can help save thousands from a merchant’s account. It is always better to be prepared in advance. Merchants should be alert and follow the guidelines discussed in the blog. In addition, they must opt for credible UPI payment gateway providers for their businesses. Zaakpay is one of the market leaders in the payment gateway segment that has proved its authenticity and reliability by transforming the payment strategy for several companies across industries.