Fintech giant Phonepe upgrades security with AI-driven ‘Phonepe Protect’ feature

Fintech platform PhonePe has introduced a new security framework called ‘PhonePe Protect’, aimed at providing users with real-time protection from fraudulent or suspicious transactions. The move marks a major technological step forward in India’s rapidly growing digital payments ecosystem, where security remains a top priority.

How does ‘Phonepe protect’ work ?

At its core, PhonePe Protect functions as a smart safety shield built directly into the PhonePe app. When a user attempts to make a payment, the system automatically scans the recipient’s mobile number for potential risk.

If the number has been flagged as suspicious by the Department of Telecommunications (DoT) through its AI-based Financial Fraud Risk Indicator (FRI) tool, PhonePe’s system steps in immediately.

• For “Very High Risk” numbers: the app blocks the transaction altogether and displays an alert message.

• For “Medium Risk” numbers: the app allows the user to proceed, but only after displaying a proactive warning about possible risks.

This means that before money leaves the user’s account, PhonePe’s system intelligently checks whether the payment might be unsafe.

Technology behind the safeguard :

The security upgrade combines AI-powered fraud detection with real-time data from the DoT. The FRI tool first introduced by the DoT to track fraudulent telecom connections uses advanced algorithms to analyze behavior patterns, transaction frequency, and reported complaints linked to mobile numbers.

By integrating FRI into its own system, PhonePe has created a two-layer protection model:

• Government-level intelligence (FRI) identifies known or suspicious fraud numbers.

• PhonePe’s system intelligence monitors live transactions and flags risky activity instantly.

The feature was showcased at the 2025 India Mobile Congress (IMC), where the DoT recognized PhonePe for being among the first fintech companies to adopt and implement the FRI tool.

Benefits for users :

The new safeguard brings multiple benefits to PhonePe’s extensive network of over 61 crore registered users and 4.4 crore merchants. It offers real-time protection by detecting and stopping payments to potentially fraudulent numbers before they are processed, ensuring that users’ money stays safe. Through clear alerts and explanations, users can make informed decisions about their transactions, understanding exactly why a payment was blocked or flagged. This transparency helps build greater confidence in the platform, reducing worries about online scams and making digital payments more secure and reliable. Additionally, the system leverages AI-driven insights, continuously learning from flagged transactions to enhance its accuracy and strengthen overall protection over time.

Phonepe’s commitment to secure payments :

Commenting on the launch, Anuj Bhansali, Head of Trust and Safety at PhonePe, said that the company’s goal is to make payment securit y seamless for every user. “PhonePe Protect’ represents our vision of creating a financial ecosystem where security is seamlessly embedded into every transaction,” Bhansali said. “With this feature, we’ve developed a robust security system that shields our 61-crore user base from cyber threats in real time. It’s more than just a feature, it's our commitment to a safer digital India.”

A step toward a safer digital economy :

With India’s digital transactions reaching record levels of around ₹3,659 lakh crore in FY24, the scale of digital payments has never been higher. However, this rapid growth has also drawn the attention of cybercriminals; digital financial frauds in the first ten months of FY25 alone amounted to nearly ₹4,245 crore, highlighting the urgent need for stronger safeguards. Against this backdrop, PhonePe’s launch of ‘PhonePe Protect’ adds a vital layer of security to the fintech ecosystem. By combining government-backed intelligence through the Department of Telecommunications’ Financial Fraud Risk Indicator and AI-driven real-time monitoring, PhonePe is setting a new benchmark for trust and transparency in India’s digital payments landscape, ensuring users can transact with confidence every time.