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UPI transactions rules change: National Payments Corporation of India (NPCI) has announced some changes for Unified Payments Interface (UPI) transactions from February 15, 2025. The changes primarily relate to the rejection of self-acceptance and chargebacks, thereby making the system more efficient.
Currently, remitting banks raise the chargeback from T+0 at the Unified Dispute Resolution Interface (UDIR). This usually gives the beneficiary banks enough time to reconcile and process the returns. This often leads to cases of rejected returns, when chargebacks have already been initiated, leading to penalties from the RBI.
The new system uses Transaction Credit Confirmation (TCC) and implements auto acceptance/rejection of chargeback, thereby eliminating the need for manual intervention. This move minimizes delays and confusion.
According to NPCI, the new rule applies only to bulk uploads and UDIR. This excludes front-end dispute resolution. Also, the beneficiary banks have time to reconcile the transaction. A chargeback occurs when an initially approved UPI transaction is reversed.
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This can happen if the customer does not accept the payment, raises disputes with the bank regarding the payment, or is charged for an item that was not actually delivered. Sometimes, errors such as duplicate payments or technical glitches during processing lead to chargebacks.
Such issues create confusion and challenges in the reconciliation process for both the bank and the customer. This requires thorough investigation and resolution to avoid financial discrepancies. The new system aims to simplify dispute resolution, complexities and delays. It aims to reduce fines while increasing overall coordination efficiency and smooth transaction process.
