AI-DRIVEN FRAUD MONITORING IN UPI AND WALLET-BASED PAYMENTS: A PRIMARY STUDY ON USER EXPERIENCE AND SECURITY PERCEPTION

Abstract

The rapid growth of Unified Payments Interface (UPI) and mobile wallet-based transactions has significantly transformed the digital payment ecosystem in India. Alongside the increasing adoption of cashless transactions, the risk of cyber frauds such as phishing, OTP theft, fake payment requests, QR-code manipulation, and unauthorized transactions has also increased. To address these challenges, financial institutions and digital payment platforms are increasingly integrating Artificial Intelligence (AI)-driven fraud monitoring systems to detect suspicious activities in real time and improve transaction security. The present study examines the impact of AI-driven fraud monitoring on user experience, awareness, and security perception in UPI and wallet-based payment systems. The study is based on primary data collected from 368 respondents using a structured questionnaire. Statistical tools including descriptive analysis, reliability analysis, correlation, chi-square test, independent sample t-test, ANOVA, and regression analysis were applied using SPSS software. The findings reveal that digital payment usage is highest among young and urban users, with Google Pay and PhonePe being the most preferred applications. The results indicate that awareness and responsible user behaviour significantly reduce fraud experience and positively influence trust in AI-based security systems. AI-driven alerts and monitoring systems improve users’ confidence in transaction security; however, moderate trust levels indicate the need for greater transparency and awareness regarding AI-enabled security mechanisms. The study concludes that the combination of AI-powered fraud detection systems and user awareness plays a crucial role in strengthening digital payment security and enhancing sustainable adoption of digital financial services in India.