From February 15, UPI chargeback process gets automated: What you need to know

The National Payments Corporation of India (NPCI) will implement new rules related to UPI transactions from February 15th. These changes primarily concern the chargeback process. NPCI has introduced an automated chargeback approval and rejection system.

NPCI has released new guidelines for UPI transactions. These are designed for automated chargeback approval/rejection based on TCC and Returns.

What is a Chargeback? Chargeback is a key process in UPI transactions. It's how you get your money back if there's a problem. The sending bank does this, but the receiving bank doesn't get to check first. Currently, the sending bank can initiate a chargeback via URCS.

Where's the problem? Since a chargeback can be initiated the same day, the receiving bank has to check immediately. But they might 'Return' it without properly checking. It gets recorded as a chargeback approval even if the transfer is uncertain.

How is this being solved? NPCI has introduced automated chargeback approval/rejection. This happens automatically in the next settlement cycle after the receiving bank uploads their Return (TCC/RET). This applies only to bulk uploads. These changes are effective from February 15, 2025.

Impact on users: This change improves inter-bank transaction processing. The direct impact on users is minimal, but it increases transaction clarity and speed.