UPI chargeback rules will undergo significant modifications starting July 15 because the National Payments Corporation of India (NPCI) streamlines dispute handling procedures. The June 20 circular enables banks to initiate chargebacks autonomously through the URCS system for transactions that were initially denied due to limits but later confirmed as valid.
The RGNB (Remitting Bank Raising Good Faith Negative Chargeback) mechanism enables chargeback processing when reason codes CD1 and CD2 are applied. The 11th chargeback attempt for a specific IFSC-account combination uses reason code CD1 while CD2 applies to the 6th chargeback between a payer-payee pair within 30 days.
Banks now have the authority to process these cases directly through the Unified Real-time Clearing and Settlement (URCS) system without needing NPCI approval. The system will consider any improper use of this process as non-compliance.
The December 2023 implementation of chargeback limits at 10 per user and 5 per payer-payee pair serves to stop fraudulent activities and abuse. The updated process maintains operational efficiency by enabling fast resolution of legitimate disputes.
