New guidelines for Unified Payments Interface (UPI) transactions have been issued by the National Payments Corporation of India (NPCI). From February 15, chargebacks based on Transaction Credit Confirmation (TCC) and returns will be automatically accepted or rejected.
What is a chargeback?
A chargeback is a UPI transaction that is reversed by the payer’s bank because of a dispute, fraud, or technical issue. When the chargeback is successful, the payer receives their money back.
Chargebacks may be started by remitting banks in the UPI Dispute Resolution System (URCS) from T+0. Beneficiary banks often have little time to process returns before a chargeback is raised since the initiation comes before their reconciliation attempts. Sometimes beneficiary banks have submitted return requests (RET), but they were denied since a chargeback had already been started. As a result, the chargeback was automatically closed.
How will it be resolved?
Chargebacks can now be automatically approved or denied based on the TCC/RET raised by the beneficiary bank in the subsequent settlement cycle after the chargeback has been made, according to NPCI’s revision of its dispute resolution procedure.
The process will only apply to bulk upload options and the Unified Dispute Resolution Interface (UDIR) and front-end dispute resolution options will not be impacted by it.
Implications for UPI member banks
The NPCI has advised all UPI member banks to take note of the changes. By eliminating needless penalties and guaranteeing a more seamless transaction reconciliation process, the new procedure is expected to increase the effectiveness of addressing disputes.
