PhonePe's Guardrails: How PhonePe is reinventing payment security

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 these innovations are embraced, users’ expectations for safe and secure experiences 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 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, PhonePe is creating a safer digital ecosystem and helping users navigate this ever-changing landscape with confidence.

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

Collaborations and partnerships

To strengthen the fight against fraud, the payments giant has 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, they establish protocols to address fraudulent activities effectively and enhance overall awareness.
• Alliance of Reporting Entities in India for Anti Money Laundering/Combatting Financial Terrorism (ARIFAC): 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.
• National Payments Corporation of India (NPCI) and banking partners: PhonePe has streamlined channels like web portals and emails to enable banks to resolve disputes in real time. Regular interactions with banks helps the company identify fraud tactics and improve redressal strategies.
• Department of Telecommunications (DoT) and Telecom Regulatory Authority of India (TRAI): PhonePe actively participates in initiatives with DoT and TRAI to identify and act against bad actors, such as those using churned or deactivated phone numbers for fraud.
• Industry seminars and conferences: PhonePe’s Trust and Safety team frequently shares 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.

01. Profile-based authentication: PhonePe’s risk management system combines real-time aggregation and personalized models, developed by its data science team. This enables the company 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.

02. Futureproofing against emerging risks: PhonePe’s scalable platforms are designed to manage growing transaction volumes and detect new-age fraud, such as 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. Its priority remains protecting users and ensuring a secure, seamless payments experience.

Upcoming features in PhonePe’s Trust & Safety ecosystem

PhonePe continues to roll out cutting-edge features aimed at strengthening fraud prevention and risk management.

• Anomaly detection models for early warning: These unsupervised machine learning models automatically flag unusual patterns across platforms, acting as an early warning system. The internal platform allows rapid development, testing, and deployment of fraud detection algorithms, keeping PhonePe ahead of threat actors.
• 360-degree risk profiling: From Day 0, PhonePe builds a comprehensive risk profile for every customer, merchant, bank account, and device. This is achieved by combining internal data with relevant external insights. Machine learning models then provide instant, accurate risk scoring across a vast ecosystem that includes 60+ crore customers, 4+ crore merchants, and over 33 crore daily transactions*. Importantly, this is done with user privacy as a top priority.
• Case management system for real-time response: PhonePe’s enhanced system supports:

01. A consolidated view of risk data for real-time investigations

02. Structured, time-bound resolution workflows

03. Integration of AML, chargeback, and support operations into streamlined modules

04. Generative AI tools to accelerate incident analysis

• Graph-based cluster detection: As fraud evolves from individual acts to coordinated clusters, PhonePe has implemented graph-based detection to identify anomalous group activities and enable real-time threat mitigation.

These tools enable PhonePe’s risk operations teams to address issues methodically, improving outcomes for users and merchants. Security remains core to the company’s mission, and its aim is to continue securing India’s digital payments ecosystem with ‘Made in India’ innovations that deter fraud, protect users, and preserve privacy.

*Data as of April 2025

Disclaimer: The views and opinions expressed in this article are those of PhonePe and do not necessarily reflect those of YourStory.