Digital payments made through downloaded apps are already a part of Indians' daily lives. Millions of people utilize UPI (Unified Payments Interface) payments to pay for everything from roadside sellers to local store purchases, phone recharges, and ticket bookings. However, a recent analysis by LocalCircles exposes an alarming trend: the popularity of "dark patterns" used by online payment platforms.

What are dark patterns?

The Indian government has identified platforms' manipulative behaviors as dark patterns. The Central Consumer Protection Authority (CCPA) has identified 13 different types of dark patterns, including false urgency, basket sneaking, confirm shaming, forced action, subscription trap, interface interference, bait and switch, drip pricing, disguised advertisement, nagging, trick questions, SaaS (software as a service) billing, and rogue malware. According to the CCPA notification, dark patterns constitute misleading advertising, unfair trade practices, or violations of consumer rights.

LocalCircles conducted a nationwide poll, receiving over 45,000 responses from users throughout India. The results offer information on the prevalence of dark patterns:

Hidden Charges: More than half (52%) of respondents reported experiencing transaction-related fees that were not mentioned upfront but deducted later. Topping up wallets with hidden charges became a common complaint.

Subscription Traps: An astounding 67% of customers had trouble disconnecting or delinking their bank accounts associated with UPI payments, a classic "subscription trap" strategy. Despite the RBI's precautions, it continues. 

Bait-and-Switch: Another dark pattern observed on some online payment platforms is Bait and Switch, in which consumers are offered a cashback scheme for doing additional transactions or adding more money to their wallet but are never paid the incentive. 62% of respondents reported being lured in with cashback incentives but never receiving them, exposing the "bait-and-switch" strategy.

Forced Actions: Despite the fact that UPI transactions are supposed to be free, 41% of respondents reported encountering the Forced Action approach, in which their funds in the online wallet up to a certain amount were blocked or they were forced to share their contact list to use the wallet payment service.

The Need for Regulatory Intervention

As the Indian digital payment ecosystem grows, regulators such as the Reserve Bank of India and CCPA must step in to guarantee that it remains free of dark patterns.