The National Payments Corporation of India (NPCI) is intensifying efforts to tackle online payment fraud by gradually phasing out 'collect calls' — a payment request feature widely exploited by scammers. This move aligns with the government's broader goal of enhancing digital transaction security and empowering consumers with greater control over their payments.
A 'collect call,' also known as a 'pull' transaction, enables a merchant to initiate a payment request directly from the customer. While this feature is designed for convenience — especially for recurring payments like subscriptions or bill payments — fraudsters have found ways to abuse it. They create fake websites, impersonate legitimate businesses, or pose as service providers, tricking unsuspecting users into approving payment requests for products or services that don't exist. Because merchants hold more control in this type of transaction, the risk of deception increases significantly.
To counter this vulnerability, NPCI is pushing for the widespread adoption of 'push' transactions instead. Under this method, the buyer initiates the payment by scanning a QR code or manually entering the payment details — ensuring the payer is in charge of the transaction from start to finish. This shift minimizes the chance of accidental or fraudulent payments, as users must actively approve the transfer, rather than being prompted by a potentially malicious source.
The move is timely, given the rising tide of digital payment fraud cases. Data from the Reserve Bank of India (RBI) reveals that the first half of FY25 alone witnessed 13,133 instances of digital payment-related fraud, leading to a cumulative loss of Rs 514 crore. For the entire financial year of FY24, the losses were even higher, with Rs 1,457 crore stolen through digital banking frauds. These alarming figures underscore the urgent need for more secure payment mechanisms and tighter controls over vulnerable processes like collect calls.
Regulators and banking officials believe this transition will cause minimal disruption, as a large portion of the Indian population is already comfortable using QR codes and app-based payments. Popular platforms like Google Pay, PhonePe, and Paytm authenticate merchant QR codes, providing an additional layer of security. This makes it harder for scammers to slip through the cracks with fake merchant profiles.
Fraudsters often rely on setting up fake businesses, creating deceptive websites, and exploiting the collect call feature to fool customers into making unauthorized payments. A key loophole they exploit is the lack of rigorous Know Your Customer (KYC) verification for many small merchants, which allows bad actors to operate undetected. To close this gap, NPCI has instructed banks and payment aggregators to carry out thorough background checks and authenticate large merchants before granting them access to the collect call functionality. However, the precise framework for this verification process remains unclear, raising questions about how enforcement will unfold.
Industry experts argue that while phasing out collect calls is a step in the right direction, additional safeguards are necessary. Some suggest implementing stricter KYC norms for all merchants — big and small — along with real-time fraud monitoring systems that can flag unusual payment behavior. Others advocate for consumer education initiatives to help users recognize scams before they fall victim to one.
As NPCI works on refining its strategy and ironing out the details of merchant verification, the push towards secure, buyer-initiated transactions is expected to make digital payments not only safer but also more reliable. This approach, paired with enhanced regulatory oversight, could reshape the digital payments landscape in India — reinforcing consumer trust while making it harder for fraudsters to exploit loopholes in the system.
