Beginning on February 15 of this year, the National Payments Corporation of India (NPCI) will enforce a new regulation for transactions made through the Unified Payments Interface (UPI). In order to streamline UPI transactions and minimize manual intervention, this new rule focuses on the automatic acceptance and rejection of chargebacks based on Transaction Credit Confirmation (TCC) and returns.

For the average person, this translates into a more efficient payment experience since there will be fewer mistakes and delays when handling contested transactions.

What is the new UPI rule?

Here's a simple breakdown of the National Payments Corporation of India’s (NPCI) new guidelines for UPI transactions:

Automatic Processing: The new rule will automatically accept or reject chargebacks (reversed transactions) without manual intervention. This will be based on the Transaction Credit Confirmation (TCC) and returns.

Bulk Uploads: This rule applies to bulk uploads and UDIR (Unique Debit Identification Reference), not the front-end option.

Bank Actions: The beneficiary bank will automatically decide to accept or reject a chargeback based on the TCC or RET raised in the next settlement cycle after the chargeback is initiated.

What is a UPI Chargeback?

A UPI chargeback is the reversal of a completed UPI transaction due to reasons like disputes, suspected fraud, or technical errors. It's initiated by the payer's bank, and if successful, the transaction amount is returned to the payer. Typically, remitting banks initiate chargebacks before beneficiary banks can act on UPI transactions.

Current Challenges

The existing process allows banks to raise chargebacks on the same day, giving beneficiary banks insufficient time to reconcile transactions. This leads to situations where beneficiary banks raise "returns" without checking their status, resulting in rejections and penalties.

NPCI Solution with new UPI rules

NPCI’s Solution To address these challenges, NPCI's new guidelines will ensure that chargebacks are automatically accepted or rejected based on the TCC or RET raised by the beneficiary bank in the next settlement cycle after the chargeback is initiated. This applies to bulk uploads and UDIR, not the front-end option.

UPI popularity

UPI's Growing Popularity In December 2024, UPI recorded 16.73 billion transactions worth Rs 23.25 lakh crore, an 8% increase from the previous month. January 2025 saw a new milestone with 16.99 billion transactions amounting to Rs 23.48 lakh crore, reflecting the rising adoption of UPI for digital payments.