How can payment gateways in India avoid fraudulent transactions?

Preventing fraudulent transactions in Indian payment platforms requires a combination of local regulatory requirements, technological tools and operational strategies. The following are professional recommendations, systematically addressed in 7 dimensions:

1. Statutory compliance framework

• Strict adherence to RBI's Payment System Operators Directive (2020)
• Implementation of the DPA2018 data protection standard (GDPR equivalent)
• Implement PCI DSS Level 1 certification requirements
• Establishment of PMLA (anti-money laundering) compliance team

2. AI Risk Control Matrix
   - Deployment of behavioural biometric engines:

   • Keystroke kinetic analysis (TypingDNA integration)
   • Device fingerprint + GPS track clustering analysis
     - UPI Intelligent Intercept System:
   • NPCI Transaction Velocity Monitoring
   • BHIM Aadhaar Pay Anomaly Pattern Detection

3. L3 Merchant Authentication System
   √ KYC Enhancement Process:
   Video KYC + CKYC database cross validation
   √ GSTIN dynamic checksum:
   Automatic interfacing to GST portal API for real-time verification
   √ TDR Smart Scoring:
   Merchant credit rating model based on CRISIL data

4. OTP Security Enhancement Programme
   ◇ SIM Swap detection system (direct connection with telecommunication operators' API)
   ◇ OTP geo-fencing technology (restricting cross-state transaction verification)
   ◇ VoiceOTP alternative programme (for older user groups)

5. RBI mandatory audit item coverage
   ✓ Daily MIS report generation (in DPSS.CO.PD.No.1815 format)
   ✓ Quarterly CERT-In penetration test
   ✓ Annual RBI Technical Architecture Assessment

6. Localised Fraud Profile Library
   - Paytm Fraud Pattern Library (contains 200+ regional scams)
   - UPI ID Blacklist Sharing Alliance
   - BharatQR man-in-the-middle attack signature identification

7. Dispute handling SLA mechanism
" NPCI mandated 2 hour emergency response window
" Escrow Account Funds Freeze Automation Interface
" Merchant Chargeback Predictive Modelling

Example of typical case handling process:
When the same IP is detected to have initiated 50 UPI Collect requests within 30 minutes, the system will: ① automatically trigger the Additional Factor authentication required by RBI; ② freeze the transaction and send an early warning to the NPCI Fraud Reporting Portal; and ③ call Yes Bank's Suspend Settlement API.

It is recommended that the following parameters be updated on a quarterly basis: FAFT list of high risk countries, RBI latest warning cases, NPCI routing rule changes. The above measures will keep the fraud rate below the BPSS baseline of 0.015%.

Okay, I will continue to dive into the technical implementation details and advanced strategies for payments anti-fraud in India, divided into the following core modules to unfold:

8. Real-time transaction monitoring system architecture

Technology Stack Portfolio:

• stream processing engine: Apache Flink (handling 2000+ TPS spikes at UPI)
• rules engine: Drools + in-house ML model (supports regionalised rule configuration)
  • Example: Special risk control strategy for overseas remittances from Kerala
• data layer::

  # NPCI Transaction Data ETL Example
  
  def transform_upi_transaction(raw_data).
  
      return {
  
          'txn_id': raw_data['NPCI_REF'],
  
          'geo_hash': geohash.encode(raw_data['lat'], raw_data['lon'], precision=7),
  
          'device_cluster': DeviceGraph.find_similar(raw_data['device_fp']),
  
          'is_high_risk': RiskModel.predict(raw_data)
  
      }
  
  

9. UPI/IMPS dedicated defence programme

10. Guidelines for Responding to the New RBI Regulations (Updated 2024)

1. eMandate Fraud Protection::

   • Mandate changes need to trigger dual authorisation (SMS + email)
   • Auto-debit amount mutation monitoring (>15% fluctuation auto-debit)

2. Cross-border Payment Enhanced Verification::

   // FATF travel rule compliance code snippet
   
   if (transaction.isCrossBorder()) {
   
       require(LRS(FEMA specification)).
   
       triggerVostroAccountCheck().
   
       applyDynamicForexLimit().
   
   }
   
   

3. AePS biometric authentication against counterfeiting:
   Using Live Detection + Liveness Score Threshold Controls

11. AI model-specific optimisation

graph TD

A[raw transaction data] --> B{feature engineering}

B --> C [spatio-temporal characteristics]

B --> D [sequence of acts]

C --> E [Geohash grid anomaly detection]

D --> F [LSTM timing analysis]

E & F --> G [XGBoost integrated learning]

G --> H [dynamic risk score 1-100] 

H -- score>75 --> I [manual review queue] 

Key Indicator Requirements:

• Recall rate ≥98% (preventing missed tests)
• FP rate ≤ 0.5% (reduced false kills)

12. Bank Collaborative Defence Network

Establish a blockchain-based sharing mechanism:

1. PAN card blacklisting federation chain (Hyperledger Fabric implementation)
2. IMPS mule account hotspot map real-time synchronisation
   3.CIBIL sub-cross validation interface

Partners include.

SBI → Yes Bank → NPCI Switch → Razorpay → Paytm 

13. Handbook on high-risk scenarios

Case1: PG route hijacking attack

✅ Immediate action.
-Call CyberCell API to freeze intermediary accounts
-Switches to the alternate PCI-certified channel

Case2: Bharat BillPay duplicate debits

✅Process.
1. BBPOS system rollback instructions
2. Priority settlement during the NPCI dispute window
3. Auto-refund + compensation interest calculation

Case 3: Aadhaar Pay fingerprint forgery

✅Response programme.
-Launches UIDAI Level 2 Biocertification
-Triggers CKYCR revalidation

Recommendations for directions that need to be continued and deepened:
① Design of UAT Environment Stress Test Solution for NPCI
② Assessment of the Impact of PSS Act Amendments on Prepaid Card Risk Management
③ Innovative applications of Tokenisation (RBI2019) in anti-fraud