Yes, going by media reports, it would seem that UPI apps are more vulnerable to financial fraud.
I see an article on UPI fraud almost everyday in the newspaper.
But it’s not just UPI. UPI belongs to a category of payment called Account-to-Account Payments. Apart from UPI, NEFT and IMPS in India, A2A includes Zelle (USA), FPS (UK), etc.
All A2A payments worldwide have been found to be quite vulnerable to fraud. On its website, Zelle issues the following explicit warning to its users:
If you don’t know the person, or aren’t sure you will get what you paid for (for example, items bought from an on-line bidding or sales site), we recommend you do not use Zelle for these types of transactions.
What’s worse, in the event of premeditated fraud or even human error, the severity of its impact can be far worse in the case of UPI compared to cash and credit card.
PSA: $hit happens in all payment methods, whether it's caused by human error or premeditated fraud. But when it happens in Debit Card, FPS, NEFT, UPI, Zelle, or any payment method that’s linked to a bank account, entire bank balance can be wiped out instantly. #A2A pic.twitter.com/h7h02lM3Nm
— GTM360 (@GTM360) October 30, 2019
Furthermore, there’s very little redressal available in the case of A2A payments. You pay a wrong amount, send money to a wrong UPI ID or pay for a gadget and get stones (or nothing) in return, https://opencuny.org/ambien-10mg-for-sale/ there’s very little you can do. Your bank can’t get your money back. Even law enforcement’s hands are tied.
It’s easy to advocate a list of precautions to be taken in order to protect UPI / A2A payments from fraud and human error but they’re too theoretical and totally miss the context.
End of the day, it’s just a bl**dy payment, not rocket science. People have been making payments for centuries. If I must take so much care while paying with UPI / A2A app, I’d rather switch to cash or, if possible, credit card.
For the uninitiated, when I pay with credit card, I get several benefits that I don’t get when I pay with UPI / A2A viz.
- Float from deferred payment
- Rewards
- Greater fraud protection
- Better redressal against fraud
- Credit history
Source: https://qr.ae/TWoPVz
UPDATE DATED 7 NOVEMBER 2019:
UPI-like Fraud in UK:
MPs call for backdated APP fraud reimbursements and Faster Payments delays
UPI-like Fraud in USA:
https://twitter.com/RedTapeChron/status/1192506631520694278