The National Payments Corporation of India (NPCI) has initiated a new rule to address Chargeback issues on completed UPI transactions. Starting Feb 15, chargebacks will be automatically processed based on Transaction Credit Confirmation (TCC) and return requests (RET), according to CNBCTV18 report.
The payer’s bank initiates the Chargeback request for reversal of a completed UPI transaction due to dispute, fraud, or technical errors. If approved by the beneficiary bank, the payer gets a refund.
Remitting banks can presently initiate chargebacks starting T+0. However, the beneficiary banks are unable to verify the transaction credit in time. This leads to rejected returns or a failed chargeback request.
Chargeback requests sometimes are closed automatically with deemed acceptance, causing Reserve Bank of India (RBI) to impose penalties. To address these issues, banks will be processing chargebacks based on a new dispute resolution system.
In other words, the beneficiary bank will process chargebacks based on TCC/RET in the next settlement cycle. The new rule applies only to bulk upload options and Unified Dispute Resolution Interface (UDIR), but not front-end dispute resolution.
Hereafter, Beneficiary banks will have enough time to reconcile transactions before finalising chargebacks. NPCI has urged UPI member banks to notify concerned officials about the new update. This will help streamline dispute handling, minimise penalties, and boost reconciliation efficiency.
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