NPCI's New UPI Chargeback Rules: What They Mean For You

The National Payments Corporation of India (NPCI) has introduced changes to how failed UPI payment disputes will be handled from July 15, 2025. The update is aimed at making the chargeback process smoother when a user is wrongly charged for a transaction that was not successfully carried out as expected.

If money is charged but the service or product is not received, like in a cancelled booking or failed order, users can file a chargeback.

What Is UPI Chargeback

UPI chargeback is a mechanism to enable customers to get their money back for transactions that have failed or are unsuccessful. A complaint is to be filed with the bank; they then start an investigation. If the complaint is proved valid, the money is then refunded. The complaints are handled by the UPI Resolution and Chargeback System (URCS), a platform banks and payment apps use to monitor and settle cases.

Why This Change Was Needed

Previously, if a bank had already raised multiple chargebacks for the same account or UPI ID combination, the system used to reject additional complaints automatically. This was intended to stop abuse of the system, but it also stalled legitimate disputes. Banks subsequently had to seek special approval from NPCI, resulting in delays.

Banks Can Now Act Without Delays

NPCI has rolled out a new procedure known as RGNB, or remitting bank raising good faith negative chargeback. It enables the initiating bank to raise a previously rejected chargeback again if the complaint is valid. Banks are no longer required to take NPCI's permission in such situations.

The receiving bank has three calendar days to respond in the case of person-to-person payments and 15 days in the case of person-to-merchant payments. In the event that they fail to respond within the stipulated time, the complaint is considered accepted and the refund is processed.

Why This Matters to UPI Users

Rohan Lakhaiyar, partner at Grant Thornton Bharat, said the rule change came at the right time. "Wide adoption of UPI payments for person-to-person and person-to-merchant has resulted in approximately 600 million transactions per day", he said.

Lakhaiyar continues, "Rapid increase in UPI transaction volumes has contributed to system fluctuations, resulting in technical errors on the payments, resulting in double debits or failed reversals, among others."

What Customers Should Know

Customers must continue to report failed transactions at the earliest opportunity. Banks would respond only after confirming the claim. The new rule does not ensure refunds for all grievances, but it eliminates hurdles that previously held back authentic claims. For customers, it could translate to faster resolution and greater faith in using UPI for small payments.