SEBI Announces ‘Valid’ UPI Safeguard to Prevent Fraud In Transactions

The Securities and Exchange Board of India (SEBI) has today taken a significant stride towards enhancing investor protection in the securities market by launching a new Unified Payments Interface (UPI) safeguard, labelled “Valid”. The initiative, which mandates verified UPI handles for all SEBI-registered intermediaries, aims to counter a growing trend of cyber scams, where fraudsters impersonate brokers or mutual fund distributors to deceive unsuspecting investors.

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Background: Surge in UPI‑based market fraud

Since the advent of UPI in the Indian capital markets in 2019, fund transfers to brokers and mutual funds have become quicker and more convenient. Yet it has also spawned fresh avenues for fraud. Fake intermediaries, often deploying deceptive communication, fake WhatsApp messages, and spoofed payment QR codes, lure investors into transferring funds to unauthorised accounts.

In recent months, SEBI has recorded a worrying increase in such cases, with average single-day UPI fraud losses touching tens of thousands of rupees per investor. The regulator’s investigation highlighted how these impersonators exploit name similarities and minor typos in UPI handles to misdirect payments.

What is ‘Valid’?

Under the new framework, retail investors will only see verified, SEBI-registered intermediaries in their UPI apps. Each certified intermediary, whether a broker, mutual fund company, depository participant, or portfolio manager, will receive an alphanumeric handle ending with @payright, preceded by their bank’s name (e.g., ABC Bank.broker123@payright).

A distinctive green thumbs-up icon inside a triangle will appear next to a verified handle, visible in UPI apps and web pages. SEBI estimates this visual aid will help investors immediately distinguish legitimate entities from unregistered fraudsters.

Additionally, the current cumulative UPI transaction cap for market payments will rise from ₹200,000 to ₹500,000 per investor per day. SEBI will periodically review the cap in consultation with the National Payments Corporation of India (NPCI).

Mechanics of verification

The simplified workflow is as follows:

• SEBI assigns a unique alphanumeric identifier to each SEBI‑registered intermediary.
• Banks acting under NPCI append the @payright suffix to these handles (e.g., xyzbroker.003@payright).
• NPCI issues the green thumbs‑up badge, visible in UPI apps when the handle is fetched or input.
• SEBI mandates the use of the Valid system from a cut-off date; legacy handles will be gradually decommissioned.

SEBI will also offer a publicly accessible tool, tentatively named ‘SEBI Check,’ where investors can manually verify a UPI handle before initiating payment.

Why the change now?

SEBI emphasised that, since 2019, UPI has served as a robust vehicle within capital markets. However, the proliferation of sophisticated scams now warranted enhanced safeguards. The draft invited public comment, especially on the @payright nomenclature, verification icon design and proposed transaction limit. 

Rolling out the system

Beginning Q3 2025, SEBI‑registered entities will begin onboarding via a phased process:

• Phase I: Syndicate banks and large brokers will migrate over to the @payright handles. SEBI closely collaborates with NPCI to ensure the use of verified identifiers.
• Phase II: Mutual fund houses, depository participants and smaller intermediaries will follow.
• Phase III: Enforcement of warnings on old, unverified handles; legacy UPI IDs will be deprecated.

In parallel, NPCI will update UPI app features so that:

• A verified handle fetch returns the green thumbs‑up icon automatically.
• Any missing badge triggers an alert box cautioning investors.
• The SEBI Check tool functions via both website and API integrations on third-party platforms.

SEBI estimates implementation costs to be minimal, mainly encompassing software updates across four nodes: SEBI, NPCI, banks, and intermediaries.

What changes for investors?

For the average trader, the experience will remain seamless but safer. Payment initiation screens will show both the @payright handle and a green icon, unverified payments will not be accepted for investment transactions.

Ongoing Systematic Investment Plans (SIPs) through existing UPI blocks will continue until expiry; however, renewals will require migration to a certified @payright handle. The doubled cap to ₹500,000 per day empowers greater flexibility, which is useful for allotment purposes such as IPOs, mutual fund lump sums, or portfolio rebalancing.

Challenges ahead

Some challenges remain:

User adoption: Educating users to rely on the green badge and new handles. SEBI plans investor awareness campaigns, online demos and multilingual support to aid transition.

App compatibility: Small UPI apps must swiftly adapt to handle badge logic; NPCI sets a September 2025 compliance deadline.

Fraudster adaptation: Scammers may attempt to mimic the badges; SEBI strongly warns that any non-verified handles remain ineligible for valid investments.

Cap adequacy: The ₹500,000 daily cap may need review if investors frequently exceed this; SEBI commits to periodic evaluation with NPCI.

Conclusion

SEBI’s “Valid” initiative marks a pivotal step in modernising payment security in the securities markets. By aligning with UPI’s ubiquitous adoption, integrating real‑time verification and offering strong visual cues, SEBI is set to deter a major breed of fraud. Once fully implemented, it promises greater peace of mind for retail investors navigating market payments in an increasingly digital world.