Behind India’s digital payments success story, a vast, coordinated laundering machine of mule accounts, VPAs, and merchant IDs is quietly moving fraud proceeds at scale and it’s growing faster than defences can keep up.
Delhi: India’s digital payments revolution has a hidden underbelly. Even as Digital transactions are to scale from the current 300 Trillion per annum (FY25) in terms of value to 907 Trillion by FY30 with UPI transaction scaling from the current 189 Trillion in terms of value to 485 Trillion by FY 30*. This is a near threefold surge, a parallel criminal infrastructure has been built directly into the country’s fastest-growing payment rails. In March 2026 alone, mFilterIt’s ongoing surveillance of the digital payment ecosystem flagged a staggering 5,24,121 mule instances, evidence not of scattered scams, but of an entrenched, industrial-scale fraud network hiding in plain sight.
* Source PWC report “The Indian Payments Handbook” released in October 2025 at the global fintech fest.a
At the heart of this shadow economy are the “mules”, bank accounts, UPI IDs, and merchant accounts hijacked into service as invisible conduits for dirty money; most of these “mules: are willing accomplices. Many belong to ordinary Indians who have no idea their identities are laundering the proceeds of fraud.
The anatomy of the network is Alarming. Of the total instances flagged, 5,20,559 were Virtual Payment Addresses (VPAs) actively misused for fraudulent activity. UPI VPAs have become the weapon of choice for fraudsters for a simple, chilling reason: they can be spun up in minutes, shared instantly, and used to collect scam payments with almost zero friction.
The data also exposes exactly where the system is bleeding. Payments Banks accounted for 41% of all suspicious VPA activity, the highest share of any category, their fast, low-friction onboarding turned into an open door for criminals. UPI merchants made up another 11% of mule activity, with some accounts, particularly those onboarded through payment aggregators, allegedly weaponised to harvest scam payments under the cover of legitimate commerce.
Taken together, the findings paint a sobering picture: fraud networks that are larger, more organised, and more mobile than ever, constantly shifting locations, identities, and methods to stay one step ahead of banks and regulators.
Commenting on the findings, Amit Relan, CEO & Co-Founder, mFilterIt, said, “Mule accounts have become the backbone of organised digital fraud in India. As UPI adoption accelerates, fraudsters are exploiting the very speed and accessibility that make the ecosystem so effective to move illicit funds through the banking channels. What we are seeing is not a handful of isolated bad actors, but a coordinated network of mule identities designed to stay one step ahead of detection. Add to this the bad actors are also coordinated with Transnational / non state actor backed players which exacerbates the problem further.
At mFilterIt, our approach is twofold. We continuously track and monitor emerging modus operandi across the digital landscape, and we identify the mule conduits enabling these operations, reporting them to the relevant Regulated Entities and Law Enforcement Agencies. Tackling this problem requires the same speed and scale that fraudsters operate at, backed by real-time intelligence and close collaboration between technology providers, banks, and regulators.”
The stakes could not be higher. As mule networks grow more sophisticated by the month, the window to identify and dismantle them is narrowing. What hangs in the balance is not just money, it is the trust of hundreds of millions of users that holds India’s digital payments miracle together. Lose that, and the entire edifice is at risk.
