PhonePe’s Guardrails: Future of Payment Security

Welcome to the final post in our four-part series on PhonePe’s commitment to securing digital payments for millions of Indian citizens. In this blog, we illustrate our continued efforts in creating secure and trustworthy systems.

The world of digital payments is changing rapidly and with consumers expecting more reliable and seamless transactions, the payments ecosystem has become more complex. As we embrace these innovations, our users’ expectations for safe and secure experiences also continue to grow. The future of digital payments therefore depends on trust, privacy, and security.

Faster payments come with challenges, making certain types of fraud easier to execute. For instance, scammers have started using IVR (Interactive Voice Response) calls to impersonate trusted institutions like banks and telecom providers. These fake calls trick people into believing the requests are legitimate, asking them to verify or authenticate private information, which can lead to unauthorized fraudulent transactions. 

Another growing concern is the misuse of generative AI, which has introduced sophisticated scams like phishing and deepfakes. Fraudsters use these tools to convincingly pose as family members, claiming they are in trouble and/or in urgent need of money. These scams prey on emotions, making it harder for people to detect the deception. Generative AI is also being exploited to bypass digital KYC (Know Your Customer) processes, allowing bad actors to impersonate legitimate users.

As these threats evolve, PhonePe has adopted stronger security protocols and continuous  user education. By combining advanced technology with awareness initiatives, we are creating a safer digital ecosystem and helping users navigate this ever-changing landscape with confidence.

At PhonePe, we are committed to consistently implementing cutting-edge technologies and fostering strong partnerships to ensure a safe and seamless experience for our users while proactively addressing the evolving challenges in the payments ecosystem.

Collaborations and Partnerships

To strengthen the fight against fraud, we have been actively collaborating with key stakeholders across industries and regulatory bodies:

• Law Enforcement Agencies (LEAs): PhonePe works closely with both central and state-level LEAs to share real-time data, conduct fraud investigations, and provide training on emerging fraud technologies. Together, we establish protocols to address fraudulent activities effectively and enhance overall awareness.
• ARIFAC (Alliance of Reporting Entities in India for Anti Money Laundering/Combatting Financial Terrorism): As a key contributor to this anti-money laundering forum, PhonePe has co-hosted training sessions, including engagements for the South Chapter, to share expertise and strengthen the industry’s defenses.
• NPCI and Banking Partners: We have streamlined channels like web portals and emails to enable banks to resolve disputes in real time. Regular interactions with banks help us identify fraud tactics and improve redressal strategies.
• DoT and TRAI: PhonePe actively participates in initiatives with the Department of Telecommunications (DoT) and Telecom Regulatory Authority of India (TRAI) to identify and act against bad actors, such as those using churned or deactivated phone numbers for fraud.
• Industry Seminars and Conferences: Our Trust & Safety team frequently share best practices at public forums, contributing to the broader industry efforts to improve safety standards.

Innovation in Technology

To stay ahead of evolving threats, PhonePe continuously innovates and deploys advanced technologies that ensure user safety.

• Profile-Based Authentication: Our risk management system combines real-time aggregation and personalized models developed by our data science team. This enables us to tailor user experiences while enhancing fraud detection across PhonePe’s products. These models leverage cutting-edge technologies, such as HBase, to process large-scale data and enable quick decision-making.

• Futureproofing Against Emerging Risks: At PhonePe, we don’t just prepare for today’s risks—we plan for the future. Our scalable platforms are designed to handle projected transaction volumes and combat emerging threats, including detection of doctored photos, deepfake audio, location spoofing, and screen-sharing.

By blending partnerships with technological innovation, PhonePe is setting new benchmarks for trust and safety in the digital payments’ ecosystem. Our priority remains protecting users and ensuring a secure, seamless payments experience.

Upcoming Features in PhonePe’s Trust & Safety Ecosystem

At PhonePe, we are continuously innovating to provide our users with a safe and secure payments experience. Here are some of the exciting features we’re introducing to enhance our fraud detection and prevention capabilities:

• Anomaly Detection Models for Early Detection: Our Anomaly Detection Models are designed to stay one step ahead of the fraud trends. By deploying unsupervised machine learning models, we can automatically detect unusual patterns or deviations across platforms. These models act as an early warning system, flagging potential risks before they escalate, and enabling proactive interventions. This platform also empowers our team to build, test, and deploy advanced algorithms seamlessly. By bridging the gap between development and deployment, we ensure we’re always ahead of the curve, leaving fraudsters playing catch-up.
• 360 Profiles for Comprehensive Risk Assessment: We create a 360-degree profile of every entity—customers, merchants, bank accounts, and devices—right from Day 0. Instead of waiting for data to accumulate over time, we combine a rich set of internal data with relevant external insights from our trusted partners to build a comprehensive risk profile. These profiles are evaluated using machine learning models, ensuring instant and accurate risk scoring. The scale of this system is monumental, covering 60+ crore customers, 4+ crore merchants, and 33+ crore daily transactions*. This robust profiling system minimizes lag in risk assessment, allowing us to make faster and more informed decisions. And of course, all of this is done while keeping users’ privacy front and center.
• Case Management System for Real-Time Response: Our improved Case Management System is a game-changer for handling fraud incidents and risk operations efficiently. This customizable console provides:

1. A consolidated view of risk data, enabling our team to investigate incidents in real time.
2. A structured, time-bound approach to resolving cases, ensuring accuracy and speed.
3. Integration of critical processes like anti-money laundering (AML), chargeback management, and support operations into easy-to-use online modules.
4. Use of Generative AI to reduce time taken for investigation of incidents

• Real Time Graph Based Cluster Detection: The landscape of fraud and abuse is marked by a continuous evolution, notably transitioning from individual actors to coordinated clusters exploiting systems. In response, we have deployed graph-based detection methodologies. These systems are crucial for identifying anomalous group activities, facilitating prompt threat assessments, and engaging real-time mitigation protocols.

With this system, our risk operations teams can address issues methodically and deliver better outcomes for users and merchants alike. At PhonePe we are continuing to deploy best-in-class security features to keep our consumers safe. This commitment is core to our DNA and our goal is to continue securing India’s digital payments ecosystem through Made in India innovations that deter fraud, protect users, and maintain their privacy.

*Data as of April 2025