How fintechs are using AI and real-time tools to prevent digital payment fraud

As digital transactions surge across India, fintech companies are strengthening real-time fraud detection systems to protect users from scams and payment-related risks.

The latest move comes from PhonePe, which has rolled out ‘PhonePe Protect’ — a new security framework that flags suspicious transactions and alerts users in real time. The system integrates with the Department of Telecommunications’ (DoT) Financial Fraud Risk Indicator (FRI) tool, which identifies mobile numbers linked to reported financial fraud. Depending on the risk level, PhonePe either blocks or warns users before the payment is completed.

The initiative reflects a wider industry trend, as payment platforms increasingly use artificial intelligence (AI) and machine learning (ML) to curb fraudulent activity and enhance