(Image source from: Moneycontrol.com)
NPCI is considering modifications to the Collect and Autopay functions on UPI due to worries about fraudulent activities, as reported by insiders. This initiative is focused on merchant-driven requests and ongoing payments that have faced criticism due to customer losses. NPCI has instructed payment aggregators to start gradually removing the Collect feature for the “person-to-person merchant” category, according to sources who spoke to NDTV Profit. This action aims to limit the use of Collect for recurring payments by merchants. Additionally, NPCI plans to implement tougher rules for displaying Autopay options so that customers can clearly see and consent to subscription payments. Collect is a payment method that allows merchants to request money instead of relying on customers to begin the transaction. Autopay allows repeated payments for bills and subscriptions. Payment aggregators act as middlemen between customers and merchants.
Payment aggregators shared with NDTV Profit, requesting anonymity, that unclear display formats have led to financial losses for customers. They anticipate that the Collect feature will evolve towards transactions based on intent and QR codes. They noted that smaller merchants might be affected by the removal of Collect in this category, but limiting it could reduce instances of fraud. Improved visibility in Autopay settings may also prevent unintentional approvals of long-term subscriptions. Discussing the effects on publicly traded companies, Ranadurjay Talukdar, Partner and Payments Sector Leader at EY India, mentioned that the gradual phasing out of P2P Collect is unlikely to significantly harm companies like Paytm, Pine Labs, and MobiKwik. He pointed out that P2P Collect has not been a key source of income and that these firms largely generate revenue from merchant payments, extra services, subscriptions, loans, and POS solutions, which will remain unchanged.
Talukdar emphasized that legitimate merchants are not expected to encounter problems since QR payments and merchant Collect options will still be available, although smaller merchants dependent on P2P Collect might need to make quick changes before adapting to QR and push payment methods. Vinit Bolinjkar, Head of Research at Ventura Securities, shared a similar perspective. "Actually, we don’t foresee much impact on the transactions. There are many initiatives by merchants to ensure that happens. We believe that the growth narrative will keep progressing from here," he said. Regarding fraud, he mentioned that limiting merchant-driven Collect requests could eliminate a common method used to deceive customers into authorizing payments, which would enhance trust and lessen confusion, even though it might not completely eliminate all fraud risks.
