KKN Gurugram Desk | The National Payments Corporation of India (NPCI) has initiated discussions to phase out the ‘pull transaction’ feature in the Unified Payments Interface (UPI). The move comes as part of NPCI’s effort to combat the increasing cases of digital frauds that often exploit this feature. Despite its benefits for users, the ‘pull transaction’ mechanism has been identified as a major contributor to fraudulent activities. However, the decision to remove this feature is still under debate as NPCI engages in discussions with various banks.
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What is Pull Transaction and How Does It Work?
Before delving into the implications of this move, it’s important to understand how pull transactions work. In a pull transaction, when a merchant sends a payment request to a customer, the requested amount is pre-filled. The customer is only required to enter their UPI PIN to authorize the transaction. This method simplifies the payment process for users but has also been a target for cybercriminals, who have exploited the system to defraud unsuspecting individuals.
In contrast, a push transaction occurs when a customer initiates the payment themselves. In this case, the customer manually enters the payment amount in their UPI app, ensuring more control over the transaction. While push transactions are considered safer, the widespread use of pull transactions has made it easier for scammers to manipulate the system and carry out fraudulent activities.
NPCI’s Effort to Reduce Digital Frauds
The rise of digital transactions in India has been accompanied by an increase in cybercrimes. Fraudulent schemes, often targeting UPI users, have become more sophisticated over time. As a result, NPCI, the organization responsible for operating India’s online retail payment and settlement system, is now exploring the possibility of discontinuing the pull transaction feature. The objective is to reduce digital frauds that are frequently committed through this method.
While the move is aimed at enhancing security, it has raised concerns among some stakeholders, especially banks, regarding the impact on legitimate UPI transactions. These concerns have triggered a debate about the feasibility of such a decision.
Concerns from Banks and Stakeholders
According to reports, many banks are concerned that removing the pull transaction feature could negatively affect genuine transactions. Some bankers fear that discontinuing this feature could reduce the efficiency of UPI payments. Additionally, they worry that the change could impact the smooth functioning of various services that rely on pull transactions, such as payments for bills, merchant services, and other routine financial transactions.
Banks have voiced their concerns to NPCI, urging the organization to reconsider the removal of this feature. They argue that while it’s crucial to tackle fraud, pulling back such a popular and widely used feature could have unintended consequences for the entire UPI ecosystem.
NPCI’s Current Discussions with Banks
As of now, discussions between NPCI and banks are in the early stages. NPCI has not made any final decisions on the matter. The consultations are ongoing, and a conclusive decision is expected in the coming weeks. In the meantime, the BCCI and other stakeholders are carefully weighing the potential impact of this change on both fraud prevention and user convenience.
The decision to consider ending the pull transaction feature comes at a time when UPI transactions are experiencing significant growth. In February 2025 alone, UPI recorded 16 billion transactions, with over 21 lakh crore rupees exchanged. This highlights the immense volume of digital transactions taking place, making it essential for NPCI to find ways to ensure that the system remains secure.
Rising Cyber Frauds Amid Growing Digital Transactions
With the growth of digital transactions, cyber frauds have also seen a sharp increase in India. Fraudsters are continuously innovating and using new technologies to scam individuals, resulting in significant financial losses and emotional distress.
The rapid growth of UPI, coupled with its accessibility and ease of use, has unfortunately made it an attractive target for fraudsters. Reports suggest that digital fraud is often carried out by exploiting the pull transaction mechanism, where users fall prey to fraudulent payment requests from scammers.
RBI’s Efforts to Address Digital Fraud Complaints
The Reserve Bank of India (RBI) has received a substantial number of complaints related to digital fraud and loans. During the first half of the fiscal year 2024-25, RBI’s ombudsman received over 27,000 complaints, with a significant portion of these complaints related to digital payments. Of these complaints, a large majority (70%) were linked to loan frauds and issues related to digital payment methods.
RBI has emphasized the importance of educating people about the risks associated with digital transactions. The central bank has launched awareness campaigns to inform users about potential frauds and the precautions they should take while making digital payments. These initiatives are part of RBI’s broader strategy to combat cybercrime and improve the overall security of the country’s digital payment infrastructure.
Impact of Ending Pull Transaction on UPI Transactions
If NPCI goes ahead with discontinuing the pull transaction feature, it could have significant implications for the UPI ecosystem. On one hand, it could reduce the number of frauds carried out through this mechanism, ensuring that users are more in control of their transactions. On the other hand, the move could complicate the payment process for certain users who find pull transactions more convenient.
For businesses, especially small merchants, pull transactions have become an easy way to receive payments. Eliminating this feature could lead to increased transaction times and a more cumbersome payment experience. Additionally, some users may find it more difficult to navigate the new system, especially those who are not as tech-savvy.
The Future of UPI and Digital Payments in India
UPI has become an integral part of India’s digital payments ecosystem, revolutionizing how people make transactions. It has made online payments accessible to millions of people, including those in rural areas, and has driven the country’s shift towards a cashless economy.
However, as the volume of UPI transactions continues to grow, ensuring the security of the platform becomes increasingly important. The potential removal of the pull transaction feature is just one of the many steps NPCI is considering to safeguard users from fraud. While it is crucial to address the risks posed by fraudsters, the BCCI and other stakeholders must ensure that any changes to UPI do not hinder the convenience and efficiency of digital payments.
NPCI’s consideration of ending the pull transaction feature is a significant move in the ongoing effort to combat digital fraud in India. While this change could help reduce fraudulent activities, it also presents challenges that need to be carefully considered. The potential impact on legitimate UPI transactions, merchant payments, and user convenience must be weighed against the need for enhanced security.
As discussions between NPCI and banks continue, it remains to be seen whether the pull transaction feature will be phased out or if an alternative solution will be found to address the growing concerns about digital fraud. Whatever the outcome, it is clear that the future of digital payments in India will require a delicate balance between security and user convenience.
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