PhonePe’s Guardrails: Real-Time Fraud Detection

Welcome to the second blog in our four-part series on PhonePe’s commitment to securing digital payments for millions of Indian citizens.  In this blog, we’ll walk you through our Trust & Safety initiatives that create a secure, reliable, and transparent platform, ensuring your peace of mind with every transaction.

Our Trust & Safety team – comprising decision scientists, investigators, engineers, and product managers across the country – oversee real-time fraud detection. This team ensures that any deviation from transaction patterns at a user or category level is investigated and monitored to reduce chances of misuse of the platform.

In today’s post, we’ll explore some of the Trust & Safety initiatives we’ve adopted to safeguard your transactions and data, while protecting your privacy.

Use of Technology to process transactions in real time 

The Made-in-India technology that has allowed us to build risk profiles for over 59+ crore* users and 4+ crore* merchants sits at the heart of our platform. These profiles assist us in identifying real-time fraud by evaluating over 31+ crore transactions a day*. All of this is done in real time within a few milliseconds during transactions, while ensuring user data is private and safe.

We undergo strict internal and external reviews for information security encryption and deploying technical and physical security measures to safeguard your information. Our database is stored on firewalled servers with stringent access. The information collected is only retained for a limited period conforming to legal and regulatory standards.

At PhonePe, our detection engine reports fraudulent transactions based on various signals such as customer demography, behavioral variables, and historical transaction patterns. This customer intelligence includes:

• Connected Intelligence: This technology helps create a users’ network map to determine their user interactions and behavior pattern
• Action Intelligence: This feature aggregates various user events by tracking device usage, transaction frequency, and user activity in real time
• Profile Intelligence: This is an updated intelligence executed in real time basis risk profiles of the receiver and sender, as well as the risk associated with the payment instrument.
• Additional Attributes: PhonePe employs behavioral biometrics systems to detect exceptions such as irregular typing, log-in attempts from new devices or different locations, which allow us to either stop fraudulent transactions or prompt users for further authentication.

Partnerships with law enforcement agencies 

PhonePe regularly engages and collaborates with cybercrime cells of various law enforcement agencies (LEAs) throughout the country. To ensure knowledge sharing, we conduct detailed sessions with various law enforcement agencies, sharing the latest fraud patterns and engaging with LEAs to explore ways in which we can both reduce fraud across the country. PhonePe is proud to have been the first ecosystem player to launch a dedicated cyber-cell portal to allow LEAs to verify and automate their request submission that can work 24X7 to help our law enforcement officers get access to real time intelligence.

This collaboration helps protect consumers by providing relevant and timely information to LEAs seeking to act against criminals. In addition, this collaboration also helps with the speedy resolution of complaints. Over time, we have developed a list of all identified fraudulent users, which is shared with government entities.

To ensure fraudulent behavior does not impact consumers, PhonePe reverses the amounts to victims’ accounts wherever funds are available with PhonePe. In case the funds are not available, we request customers to rely on LEAs and respective banks to support the recovery of funds.

User education

We believe that to make digital payments safe, easy, ubiquitous, and accessible for all Indians, it is also crucial to educate our customers about fraud and ways in which different types of fraud could manifest. In addition to investments in cutting edge technology, through consistent outreach and education, we want to empower our users to identify and tackle fraud.

Our continuously-updated trust and safety blog includes information about emerging fraudulent trends and scams, how users can spot them, and what resources are available for assistance. Through our blog, we have released information about a host of common and emerging types of fraud including, among others:

• Aadhaar Card fraud
• Fake apps
• Online trading scams
• Lottery scams
• Electricity scams
• Fake payment screenshots
• SMS spoofing frauds
• Social media impersonation
• Loan Scams
• Cashback frauds

In our next post, we will dive into some unique features PhonePe has developed to address emerging security challenges for our consumers. These features enable us to preemptively warn our users and ensure highest levels of integrated security.

*Data as of January 2025