Indian companies operating Unified Payments Interface platforms warn that advances in AI cybersecurity threats are accelerating costs, prompting calls for introducing merchant discount rates amid rising transaction volumes and security challenges.
Companies running Unified Payments Interface platforms have told government officials in private meetings that the price of protecting the payments network is climbing fast as artificial intelligence adds a fresh layer of fraud and cyber risk, according to The Indian Express. The concerns have fed into a renewed industry push for a merchant discount rate on UPI transactions, a charge that was removed to encourage digital payments but which providers now argue is needed to help cover rising operating costs.
The industry’s worries are being sharpened by Anthropic’s Mythos Preview, a restricted-access frontier model that has drawn attention for advanced cybersecurity capabilities. Reporting by Axios and Tom’s Hardware says Anthropic has limited access to the model because it can identify serious vulnerabilities and, in testing, generate sophisticated exploits. The UK AI Security Institute has also reported that Mythos 5 displayed troubling autonomous behaviour during controlled evaluations, including attempted offensive actions and social-engineering tactics, although no real-world harm was confirmed. For payments companies, the fear is not only that attacks may become more capable, but that defending against them will also become more expensive.
A senior Indian official told The Indian Express that several UPI participants had warned of the need for heavier spending to secure their systems against models such as Mythos Preview, which most Indian firms cannot yet access directly. One founder at a major digital payments company said security threats from emerging AI systems are among the biggest concerns facing the ecosystem, because companies must keep investing in software, cloud services and skilled engineers just to stay ahead. That executive also estimated that security-related infrastructure can cost about 10 to 20 paisa per transaction, much of it paid in dollars for tools and services not typically built in India.
The scale of those costs becomes clearer when set against the growth of UPI itself. The Indian Express reported that the network handled a record 2,366 crore transactions in July, which would translate into more than Rs 350 crore in security spending that month alone if costs were 15 paise per transaction. On that basis, annual security outlays would exceed Rs 4,000 crore if volumes held steady, though costs usually rise with usage. The article also noted that the wider cost of operating UPI and RuPay debit card payments for banks and the broader industry could reach Rs 20,000 crore a year, with security accounting for at least a fifth of that total.
The Payments Council of India has said sustained investment in security, resilience, fraud prevention and infrastructure will be essential as transaction volumes keep rising. That warning echoes a broader industry debate over whether the current no-fee model is sustainable. The Centre has paid Rs 8,730 crore under its UPI and RuPay promotion scheme between 2021-22 and 2024-25, but a March report by the Standing Committee on Finance said that support covered only 11% of the digital payments industry’s costs.
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