PhonePe

PhonePe’s guardrails: real-time fraud detection

PhonePe’s Trust & Safety team has put in place initiatives to safeguard transactions and data, while protecting user privacy.

Friday February 14, 2025 , 4 min Read

PhonePe’s commitment to securing digital payments for crores of Indian citizens has led to Trust & Safety initiatives that create a secure, reliable, and transparent platform, ensuring peace of mind with every transaction.

The Trust & Safety team – comprising decision scientists, investigators, engineers, and product managers across the country – oversees real-time fraud detection. It 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.

PhonePe’s Trust & Safety team has put in place initiatives to safeguard transactions and data, while protecting user privacy.

Use of technology to process transactions in real time

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

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

The PhonePe 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 user interactions and behavior patterns.
Action Intelligence: This feature aggregates various user events by tracking device usage, transaction frequency, and user activity in real time.
Profile Intelligence: This updated intelligence is executed in real time basis risk profiles of the receiver and sender, and 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 it 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, it conducts detailed sessions with various agencies, sharing the latest fraud patterns and engaging with LEAs to explore ways in which they can both reduce fraud across the country.

The company is the first ecosystem player to launch a dedicated cyber cell portal to allow LEAs to verify and automate request submission that can work 24X7 to help 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, the company has 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. In case they are not, it requests customers to rely on LEAs and respective banks to support the recovery of funds.

Empowering users to identify and tackle fraud

PhonePe believes it is crucial to educate customers about fraud and ways in which different types of fraud could manifest to make digital payments safe, easy, ubiquitous, and accessible for all Indians. In addition to investments in cutting-edge technology, it aims to empower users to identify and tackle fraud through consistent outreach and education.

The company’s 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. The blog has information about a host of common and emerging types of fraud including, among others:

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