NPCI Introduces Auto Acceptance and Rejection of Chargebacks in UPI Transactions

The National Payments Corporation of India (NPCI) has announced fresh instructions to streamline the process of chargebacks in UPI transactions. These new guidelines will automate the acceptance and rejection of chargebacks based on the Transaction Credit Confirmation (TCC) and returns raised by beneficiary banks, following a chargeback.

Under the new process, chargebacks will be automatically accepted or rejected in the next settlement cycle after the chargeback is raised. However, this process will apply only to the bulk upload option and UDIR, not to the front-end option.

The issue stems from the current system, where remitting banks can raise chargebacks as early as T+0 in the Unified Real-time Clearing and Settlement (URCS) system. This early action often leaves beneficiary banks with insufficient time to reconcile and address returns before a dispute turns into a chargeback.

Previously, some beneficiary banks raised “returns” without checking whether the chargeback had already been processed, leading to confusion. In some cases, chargebacks were closed on a deemed acceptance basis, and the beneficiary banks faced penalties from the Reserve Bank of India (RBI).

To resolve these issues, NPCI’s new process will automatically accept or reject chargebacks based on the TCC/RET provided by the beneficiary bank. This will help streamline the reconciliation process and avoid unnecessary disputes.

The new process is scheduled to be implemented in URCS starting from February 15, 2025. NPCI has advised member banks to inform their staff about the updated procedures to ensure smooth implementation.

In related news, NPCI reported a significant achievement in January 2025, with UPI transactions reaching a record 16.99 billion transactions, totaling ₹23.48 lakh crore.

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