Online Payment: Timely Alerts on Transactions via UPI, Debit Card, Credit Card, Net, and Mobile Banking to Prevent Frauds

To ensure the safety of bank accounts from unauthorized transactions, many banks have implemented a new safety feature: transaction confirmation alerts. This feature sends an immediate alert to the account holder before allowing any unusual or suspicious transaction, enabling them to either consent to or decline the transaction. Banks like ICICI Bank, HDFC Bank, and Standard Chartered Bank have already implemented this fraud prevention measure.

How the Fraud Prevention Feature Works

Banks are developing credit intelligence systems to identify suspicious transactions that deviate from usual patterns. When such a transaction is detected, an immediate alert is sent to the account holder for confirmation. 

For example, if an HDFC Bank credit cardholder in Mumbai has a high-value transaction initiated from a South African website, the bank’s credit intelligence team will call for confirmation. If the account holder does not respond or denies the transaction, it will be declined.

According to Manish Agrawal, Executive Vice President of the Credit Intelligence and Control Department at HDFC Bank, this monitoring framework is implemented across all channels, including UPI, net banking, mobile banking, credit, and debit cards to safeguard customers against potential frauds.

ICICI Bank also uses a similar system for UPI transactions. For instance, if the bank cannot reach a customer to confirm a UPI payment, an SMS alert is sent, and the transaction may be blocked if not confirmed.

Standard Chartered Bank employs fraud risk management tools that analyze data such as device, location, internet connectivity, merchant type, and transaction patterns. This comprehensive approach helps detect and prevent fraudulent activities.

Activation of the Feature

The transaction confirmation feature is selectively activated based on parameters such as a risk score developed using AI/ML, unusual payment patterns, and transaction velocity. Sheetal R. Bhardwaj, Executive Board Member of the Association of Certified Financial Crime Specialists (ACFCS), explains that banks use factors like transaction amount, frequency, location, and recipient to establish baseline patterns and detect deviations.

Case Studies and Techniques

One example is a customer of ICICI Bank whose son, living in the UK, uses his credit card for music software subscriptions. When a transaction from a US-based company appeared, ICICI Bank called for confirmation due to the unusual geolocation. Similarly, HDFC Bank uses geofencing to set virtual boundaries around specific geographic areas, triggering additional verification if a transaction is initiated from outside the defined area.

Banks also use geolocation to compare the location of a transaction with the customer’s usual locations to identify suspicious activities. Pradeep Janardanan from Standard Chartered GBS explains that IP controls involve monitoring the IP address from which a transaction is initiated, flagging any suspicious IP addresses for further investigation.

Customer Perspective

While some customers might find these additional steps inconvenient, experts believe the transaction confirmation feature significantly helps in eliminating fraudulent transactions. Bhardwaj emphasizes that despite the minor inconvenience, these measures are crucial in protecting customers from potential financial loss due to fraud. The peace of mind provided by such security features outweighs the slight inconvenience of confirming transactions.

This proactive approach by banks ensures that customers’ financial safety is prioritized, making online and mobile banking more secure against fraud.

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