Wrong UPI ID Payment? Refunds Now Faster and Easier – Here's What’s Changed from July 15

If you've ever sent money to the wrong UPI ID or faced a double deduction during a transaction, you're not alone. With over 600 million UPI transactions processed daily in India, such issues are not uncommon. In a significant update aimed at resolving these problems, the National Payments Corporation of India (NPCI) has revised UPI chargeback rules to make refunds quicker and smoother.

These new rules have been in effect since July 15, 2025, and are designed to help both users and small merchants get faster resolution for failed or disputed UPI transactions.

What Has Changed for UPI Users?

1. Whitelist Requirement Removed

Earlier, if a chargeback (refund request) was rejected due to certain limits, banks had to request special permission from NPCI—known as “whitelisting.” This often caused delays in the refund process.
Now, banks can directly approve valid chargebacks, even if they were previously rejected. This eliminates unnecessary layers of approval and speeds up the overall resolution process.

2. Faster Refunds with Defined Timelines

With the removal of the whitelist barrier and the introduction of stricter Turnaround Time (TAT) guidelines for banks, legitimate chargebacks will now be processed much faster.
Industry experts like Kishan Sundar (CTO, Maverick Systems) and Kunal Verma (CEO, Freo) believe that what previously took days may now be resolved within hours, making digital payments more reliable for users.

3. Better Protection Against Technical Glitches & Frauds

According to Rohan Lakhaiyar of Grant Thornton India, the revised chargeback mechanism addresses common technical issues such as:

• Duplicate debits (when the same transaction is processed twice),

• Fraudulent transfers, and

• Payment reversals due to incorrect UPI IDs.

The stricter timelines will also ensure that banks handle disputes more efficiently, creating a more trustworthy ecosystem for end-users.

A Big Relief for Small Merchants

Rohit Reji, Co-founder and CEO of Neokred, stated that this update is a game-changer for small business owners. One of the biggest challenges for such merchants is maintaining enough working capital when refunds are delayed.
With faster refund processing, merchants will no longer have to wait long for the return of incorrectly debited funds—helping them manage their daily operations more effectively.

However, Reji also emphasized the need for stronger fraud detection systems, as banks will now have more autonomy in processing chargebacks. Tools like ProfileX, already being used in the BFSI sector, could play a vital role in ensuring fraud detection remains strong.

Why This Matters

With UPI now an integral part of India’s digital economy—from buying groceries to paying bills—the need for trust, speed, and transparency in the system is more crucial than ever.
These rule changes not only make the platform more user-friendly but also set the stage for scalable and secure digital financial infrastructure in the years to come.

Key Takeaways:

• NPCI's new UPI chargeback rules are live since July 15, 2025.

• Banks can now approve previously rejected chargebacks without NPCI’s intervention.

• Faster refunds: Days-long wait may now reduce to just a few hours.

• Stronger fraud safeguards and improved confidence among users and merchants.

• A boost for small businesses, reducing their working capital stress.

As India continues to embrace digital transactions at record speed, NPCI’s new chargeback reforms mark a significant step toward building a more efficient and resilient payment ecosystem.