Red flags rise as UPI autopay fuels profit surge of Indian apps

United Payments Interface (UPI)’s autopay feature was meant to make life easier for users in India. Instead, it is turning into a headache for some, leading to unwanted charges and confusing cancellation processes.

Seen as India’s answer to recurring digital payments, UPI autopay is now caught in a web of dark patterns, which are tricks in app or website design that mislead users into doing things they didn’t plan to.

Image credit: Timmy Loen

The autopay feature, which sets up automatic debits for everything from over-the-top (OTT) media service subscriptions to loan payments, is being allegedly gamed by several apps that target low-awareness users, particularly from Tier 2 and Tier 3 towns. The result: money silently leaving users’ accounts each month, often without their knowledge or consent.

Take the case of a cab driver, shared via a LinkedIn post by Oolka founder Utkrishta Kumar. The driver noticed a small amount being deducted from his account every month but didn’t know why.

When Kumar checked the driver’s Google Pay app, he found an autopay mandate worth 49 rupees (US$0.5) per month for a music app that the driver hadn’t used in almost a year. Over 11 months, the driver paid US$6.3 without realizing it.

“There are apps today acquiring 50,000 to 100,000 new users every month using such tactics,” says a Bengaluru-based fintech startup founder on condition of anonymity.

Apps such as audio show provider Kuku FM, online learning platform Seekho, and OTT app Stage attract users with a trial offer worth 1 or 2 rupees. What is hidden in the fine print is that this trial sets up a recurring UPI autopay mandate. By the time users realize that they have signed up for a monthly subscription, the money has already started leaving their accounts.

Kuku FM declined Tech in Asia’s request for comment, while the founders of Seekho and Stage didn’t respond to our request for an interview.

Ashish Taneja, founder of VC firm GrowX Ventures, says that “several lesser-known apps” are using these dark patterns to grow fast. “To keep users, they may add extra steps or friction to make it hard to cancel subscriptions via UPI autopay,” he adds.

Many well-known OTT apps in India such as JioHotstar, Amazon Prime, and Sony LIV have also eliminated one-time payments and are mandating auto-debit transactions.

As UPI autopay becomes mainstream, more users are at the risk of slipping into this cycle of set-and-forget.

Hidden traps of UPI autopay

The National Payments Corporation of India (NPCI) – the government organization that operates UPI payment rails – introduced UPI autopay in 2020 to simplify recurring payments by removing the hassle of repeated approvals.

Since then, adoption has surged. In January, monthly UPI autopay transactions jumped to 175 million from 58 million a year before.

Dark patterns or fair terms?