There is a sterner caveat for investors in India’s digital payments boom: the value of fraud tied to suspect applications has gone up 4x in two years, a sign that the cost of risk is structurally on the rise. The latest insights from Experian put the exposure at Rs 48,021 crore for FY26, up from Rs 12,230 crore in FY24, as what were once scams have coalesced into organised networks.
The message from the market is plain. Volumes may be up but so are the losses. Experian’s research has it that 62 percent of businesses have been hit by more fraud attacks overall, while 66 percent say their fraud-related losses are up year-on-year. Such an increase in loss ratios is bound to put pressure on growth targets, underwriting appetite and margins.
Why this jump matters for investors
Controls are not keeping pace with the value-at-risk. Lenders, fintechs and payment firms will find the data compelling evidence for larger provision buffers and the like. One can expect higher compliance bills and some friction in onboarding as checks get tighter.
Reputation is at stake too. In a market this competitive, trust is fickle; when fraud makes the headlines, churn and acquisition costs can be amplified in short order.
Organised fraud is scaling faster than defences
Account takeover is the leading vector, with 77 percent of those surveyed noting an uptick. Money muling and identity theft are not far behind at 71 percent apiece, a testament to the way fraud rings make use of mule accounts and stolen identities.
Then there is the changing nature of the risk. First-party and synthetic business fraud have seen the most marked rise at 39 percent, indicative of more calculated schemes aimed at credit origination and onboarding.
The hardest risks to contain
Fifty-eight percent of organisations name Authorised Push Payment fraud as the most vexing to deal with. Here the victim is put upon to authorise the transfer, usually after being hoodwinked by a phishing attempt or a spurious investment offer.
At 54 and 53 percent respectively, identity theft and mule activity are persistent headaches. A good 52 percent find the whole spectrum of first-party fraud, deepfakes and synthetic identities hard to pin down, which speaks to a diversified threat surface rather than one type of problem.
Operational barriers raise the bill
Execution gaps have been pointed out by institutions as things that impede a prompt response and detection.
When it comes to the obstacles most often put forward, compounding losses and false declines top the list. With controls tending to fall behind the perpetrators, one sees a corresponding increase in fraud write-offs and revenue leakage.
Organisations point to several key pain points:
– 48% are hampered by an inability to be agile in updating models
– 47% do not have the device data they need for proper signals
– 44% are working with limited real-time monitoring
– 43% face the burden of heavy manual reviews
– 42% report high false positives
Where exposure is found
Risk varies from one product to another. An Experian analysis has credit cards as having the steepest anomaly rates, if only for a time before they level off. Business loans are on the decline overall, save for a short spike in FY26 Q1. Auto loans are on an upward trajectory of sorts, with anomaly rates dropping in most quarters; personal loans are fairly stable barring minor variations. Two-wheeler loans come in with the lowest anomaly rates all around.
Geography tells a similar story. While every state has its share of application anomalies, the incidence is not equal. Delhi, Haryana, Rajasthan, Uttar Pradesh and West Bengal post the highest catch rates at over 10 per cent. In Kerala, Tamil Nadu and Karnataka the figure is under 8 per cent.
Revenue trade-offs and next steps
There is a cost to high false positives and the manual reviews that go with them, not to mention the drag on approvals. The operational objective is straightforward: put a stop to fraud without turning away good customers. This calls for better signals rather than simply tougher rules.
“Identifying genuine opportunities and nipping emerging risks in the bud will be what sets you apart in a market that is ever more digital,” says Manish Jain of Experian. “By bringing together data, analytics and wider intelligence, you build resilience for sustainable growth.”
What happened, why it matters, what is next
Experian has released The New Frontier: Emerging Trends in Fraud Prevention this week. Behind the scenes, 109 senior fraud decision-makers in India were put to the question in a 2025 study done with Forrester Consulting to get their take on what is reshaping the field.
The path is clear enough. Networks are well-organised and attacks are on the upswing, making detection a harder proposition. APP fraud is 58 per cent difficult to handle and identity-based schemes are persistent, which is where investment needs to be made.
Investors should look for three things to indicate progress:
– A reduction in manual reviews and quicker model updates
– More device and identity data being brought to bear across the board
– Real-time monitoring to stem both false declines and losses
Application anomalies and mule activity have become the main front lines. Firms with the foresight to adopt network-aware and data-driven strategies will be in a stronger position to defend their margins and grow without undue risk. Laggards can expect to see their losses mount along with the regulatory and reputational heat.
