In its Statement on Developmental and Regulatory Policies released on February 6, 2026, the Reserve Bank of India (RBI) has outlined targeted measures to fortify the payments ecosystem amid surging digital transaction volumes. A standout initiative is the forthcoming Discussion Paper titled Exploring Safeguards in Digital Payments to Curb Frauds. This move underscores RBI’s commitment to balancing innovation with robust customer protection, especially as digital payments have become the backbone of India’s financial infrastructure.
The Rapid Rise of Digital Payments and Emerging Fraud Risks
Over the past decade, India has witnessed an extraordinary digital payments revolution. Transactions via Unified Payments Interface (UPI), cards, and wallets have skyrocketed—from 1,029 crore in FY2018 to over 18,000 crore in FY2025, according to NPCI data. UPI alone processed ₹247 lakh crore in volume last fiscal year, driven by structural shifts like demonetization, Jan Dhan Yojana, and post-pandemic adoption.
However, this growth has fueled sophisticated frauds. RBI reports highlight a 30-40% year-on-year rise in digital payment scams, including phishing, social engineering, and unauthorized UPI transactions. In 2025, fraud losses exceeded ₹15,000 crore, disproportionately affecting retail users. Vulnerabilities stem from weak authentication, instant crediting, and inadequate user awareness, eroding trust and hindering financial inclusion.
Core Proposals in the Discussion Paper
The Discussion Paper aims to introduce “calibrated safeguards” without stifling usability. Key measures include:
- Lagged Credits for High-Risk Transactions: To prevent irreversible frauds, RBI proposes delaying credits for certain high-value or flagged transactions (e.g., above ₹50,000 or cross-border). Funds would settle after a 24-48 hour verification window, allowing reversal if fraud is detected. This mirrors practices in some global systems like the EU’s PSD2 framework.
- Enhanced Authentication for Vulnerable Segments: Specific classes of users, such as senior citizens (aged 65+), will require additional factors like biometric confirmation or OTP via trusted devices for transactions exceeding thresholds (e.g., ₹5,000). This addresses data showing seniors comprise 25% of UPI fraud victims, per recent CERT-In reports.
- Other Safeguards Under Exploration:
- Mandatory transaction alerts with cooling-off periods for suspicious patterns.
- AI-driven real-time fraud scoring integrated into PSPs and banks.
- Standardized liability frameworks to shift more responsibility to platforms for negligence.
These proposals align with RBI’s broader digital payments vision, complementing existing tools like the UPI 2.0 safety features and the 2024 fraud monitoring circulars.
Implications for Banks, Fintechs, and Customers
For banks and Payment System Providers (PSPs), implementation will demand upgrades in backend systems, potentially raising compliance costs by 10-15% initially. Fintechs like PhonePe and Google Pay must enhance KYC and monitoring to avoid penalties under the Payment and Settlement Systems Act, 2007.
Customers gain stronger protection, fostering confidence in digital channels. Yet, usability concerns persist—lagged credits could disrupt merchant payments, prompting RBI to seek industry feedback via the Discussion Paper.
| Stakeholder | Key Impact | Opportunity |
| Retail Customers | Reduced fraud exposure; layered security for seniors | Greater trust in UPI/AEPS |
| Banks/PSPs | Higher compliance burden | Edge in AI fraud detection tools |
| Fintechs | Stricter authentication norms | Innovation in user-friendly safeguards |
| Regulators | Data-driven policy refinement | Lower systemic fraud rates |
Path Forward: Stakeholder Engagement
RBI invites comments on the Discussion Paper by March 31, 2026, emphasizing a collaborative approach. This follows successful consultations on prior frameworks like the 2023 Digital Lending Guidelines. Banks should proactively model these changes, leveraging RBI’s sandbox for testing.
In conclusion, these measures signal RBI’s proactive stance in securing India’s digital payments future. By curbing frauds, they will sustain the 50%+ CAGR trajectory while prioritizing customer safety—a win for the ecosystem.
This analysis is based on the RBI Statement dated February 6, 2026. For the full document, visit RBI’s official website.
