By D. Maan, Jadetimes News
Street Vendor's Experience with UPI
For the past seven years, Arun Kumar has set up his fruit stall daily on a busy Mumbai street, facing challenges like the risk of robbery and the threat of local authorities dismantling his unlicensed stall. However, the advent of UPI (Unified Payments Interface) has simplified at least one aspect of his business over the last four years.
Before Covid, all transactions were in cash.
Now, customers use UPI for quick, hassle free payments.
Handling cash and giving change are no longer issues.
The Rise of UPI in India
Launched in 2016 through a collaboration between India's central bank and the nation's banking industry, UPI is an app based instant payment system. It allows users to send and receive money, pay bills, and authorize payments in a single step without entering bank details or personal information. Its popularity has made India the largest real-time payments market.
UPI recorded 14 billion transactions in May, up from nine billion the previous year.
Its free, user friendly nature has contributed to its widespread adoption.
Vulnerabilities and Fraud Risks
Despite the convenience of digital payments, UPI has become a target for scammers. According to Shashank Shekhar, founder of the Future Crime Research Foundation, scammers exploit various methods to trick users, including convincing them to share their UPI PIN numbers and creating fake UPI apps that mimic legitimate banking apps to steal login details.
Digital literacy and safe internet practices have lagged behind the rapid digital transformation.
Nearly half of all financial fraud between January 2020 and June 2023 involved the UPI system.
There were more than 95,000 cases of UPI fraud in the financial year ending April 2023.
Personal Stories of Fraud Victims
One such victim is Shivkali, a 22 year old from Bihar state. She was scammed while trying to purchase a scooter she found on Facebook. After making a few payments via instant transfers, she realized she had been cheated when the scooter was never delivered.
She ended up paying $200 for a scooter that never arrived.
Despite having some educational background, she fell for the scam due to the scammer's convincing tactics.
Efforts to Combat UPI Fraud
The government and central bank are exploring ways to protect UPI users from scammers, but compensation for victims currently requires approaching their banks. Financial crime expert Dr. Durgesh Pandey highlights the deep rooted issues, noting that banks and telecom companies often fail to make thorough identity checks, making it difficult to trace fraudsters.
Banks face the challenge of balancing inclusivity, ease of business, and enforcement of identity checks.
Both the victim and the bank should bear the loss in most fraud cases, as the problem often lies with the banks, but victims frequently share their credentials.
Promoting UPI in Rural Areas
Despite challenges, UPI is being actively promoted in rural areas where banking services are limited. Poonam Untwal from Rajasthan runs a guidance center to help people use the internet and digital banking.
Many rural residents lack education and smartphone proficiency.
She teaches them that phones can be used for banking, enhancing convenience.
UPI is believed to boost the local economy by facilitating small home based businesses.
UPI's International Expansion
UPI is not only gaining traction in rural India but also spreading overseas. Retailers in countries like Bhutan, Mauritius, Nepal, Singapore, Sri Lanka, and the UAE now accept UPI payments.
France has become the first European country to accept UPI payments, starting with Eiffel Tower tickets.
This expansion showcases UPI’s growing global influence and adoption.
Balancing Convenience and Security
In Mumbai, Arun Kumar appreciates the ease of UPI but remains cautious due to fraud concerns. While UPI has simplified transactions for small vendors, reliable internet connectivity remains crucial.
Without a good internet connection, customers can avoid payment.
Kumar is wary of increasing UPI frauds and hopes for mechanisms to protect small vendors from losses.
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