NPCI issued new guidelines for UPI chargeback process, rules will be implemented from February 15

New Delhi: To make digital payments in India more secure and better, the National Payments Corporation of India (NPCI) has issued a new guideline regarding the chargeback process related to UPI transactions. This new rule will come into effect from February 15, 2025 and aims to reduce disputes in UPI transactions.

What is a chargeback?

Chargeback is a process in which a UPI transaction is considered disputed and a refund is demanded from the bank. It is usually raised by the sending bank before the receiving bank can take any action on the status of that transaction. Currently, the sending bank can request a chargeback on the same day (T+0) of the transaction, but this process does not give the receiving bank time to resolve the transaction, which sometimes leads to unnecessary chargeback disputes.

Where does the problem arise?

When the sending bank raises a chargeback on the same day, the receiving bank does not get time to process the return. In many cases, the receiving bank has already started the process of returning the funds, but the chargeback is also raised. If the bank does not check the status of the chargeback, the chargeback is automatically accepted, which leads to unnecessary disputes and increases the possibility of RBI penalty.

What solution has NPCI found?

Keeping these problems in mind, NPCI has issued a new guideline to improve the chargeback process. Now if the receiving bank has already processed the return (TCC/RET), then the chargeback will be automatically rejected. If TCC/RET is entered by the beneficiary bank in the next settlement cycle after raising the chargeback, it will be automatically accepted. This new process will be applicable to the bulk upload option and UDIR not in front-end option, which will reduce disputes and improve the process. 

What will be the benefit?

Under this new system, the beneficiary bank will now have the right to accept or reject the chargeback. This will reduce disputes, improve the auto chargeback process, and reduce the need for manual intervention. This will help beneficiary banks manage disputes better.

Apart from this, the NPCI report also stated that in January 2025, UPI has created a new record of Rs 23.48 lakh crore with 16.99 billion transactions, which shows the rapidly increasing popularity of digital payments.