In response to the growing incidence of payment fraud, payment aggregators are planning to establish a centralized “negative database” to track and prevent fraudulent transactions. This initiative aims to create a repository containing information on fraudulent activities involving both customers and merchants. The database will be accessible to all licensed payment aggregators, enabling them to detect and prevent fraud more effectively.
The negative database will also contain a list of merchants with a history of fraudulent activities, aiming to curb the practice of fraudsters switching between payment gateways to avoid detection. By refusing to onboard such merchants, payment aggregators hope to reduce the overall risk for both consumers and businesses.
The imperative
The creation of the negative database will be overseen by a self-regulatory organization (SRO), for which the Payments Council of India has already applied to the RBI. The SRO will also encourage industry members to share data on fraudulent transactions, addressing the current lack of information-sharing among payment aggregators.
The move comes at a time when digital payment fraud has surged, driven by increased internet penetration and the rising number of online transactions. According to the Reserve Bank of India’s (RBI) latest annual report, cases of online payment fraud quintupled in 2023-24, with cybercriminals defrauding victims of Rs 1,457 crore.
Currently, there are nearly 60 payment aggregators in India, including major players like Amazon Pay, Razorpay, PayU Payments, CCAvenue, and BillDesk. The new database is expected to serve as an early warning system, allowing aggregators to identify and block fraudulent activities before they impact their platforms. This includes preventing fraudsters from using the same card or carrying out similar schemes across multiple platforms.
Payment aggregators play a crucial role in facilitating digital transactions by receiving payments from customers, pooling them, and transferring the funds to merchants. This new initiative aims to strengthen the security of these platforms and protect all stakeholders from the growing threat of payment fraud.
