UPI Transactions Set for Changes from February 15 – Key Rules Explained
UPI Transactions Set for Changes from February 15 – Key Rules Explained
The National Payments Corporation of India (NPCI) has released new guidelines for Unified Payments Interface (UPI) transactions, introducing an automated system for handling chargebacks based on Transaction Credit Confirmation (TCC) and returns.
Automated Chargeback Processing in UPI
Under the revised framework, chargebacks will be automatically accepted or rejected based on TCC/RET data submitted by the beneficiary bank in the next settlement cycle following chargeback initiation. However, this system applies only to bulk upload options and UDIR, excluding front-end transactions.
Understanding Chargebacks in UPI Transactions
Chargebacks occur when remitting banks initiate transaction disputes before beneficiary banks can respond. The current system permits chargebacks from T+0 in the Unified Real-time Clearing and Settlement (URCS) framework, sometimes leading to premature disputes.
Challenges with the Current System
The primary issue stems from remitting banks initiating chargebacks on the same day of the transaction. This leaves beneficiary banks with little time to reconcile payments and process returns before the chargeback process escalates. Consequently, many beneficiary banks have issued returns without verifying rejection statuses, leading to chargeback closures by default and penalties from the Reserve Bank of India (RBI).
Implementation of the New Chargeback Resolution System
To mitigate these issues, NPCI’s new system will streamline chargeback handling, ensuring that decisions are based on verified transaction status. The automated process is scheduled for implementation in URCS starting February 15, 2025.
NPCI has urged all member banks to adopt these changes and communicate them to relevant officials.
UPI Growth Continues to Surge
Meanwhile, UPI continues to witness exponential growth, recording 16.99 billion transactions in January 2025, amounting to a staggering ₹23.48 lakh crore in total value, according to recent NPCI data.
This move by NPCI is expected to enhance dispute resolution efficiency, reduce penalties, and further strengthen the UPI ecosystem as digital payments adoption surges in India.
