NPCI to roll out Real-time dispute resolution system for UPI

The National Payments Corporation of India (NPCI) is conducting closed-door pilots with top banks and payment companies to roll out a real-time dispute resolution system for failed transactions on the popular Unified Payments Interface (UPI) railroad, three people directly aware of the matter said to The Economic Times. 
 
The development comes at a time when there has been an unprecedented surge in new users on the UPI channel, which has increased loads on the servers of banks and the NPCI, leading to a higher number of failed transactions. 
 
All major sponsor banks and payment applications are testing an Online Dispute Resolution (ODR) system on a limited scale to provide a real-time grievance redressal system for UPI users, the people told ET. 
 
In practice, the ODR system would provide UPI users an online window to instantly lodge complaints on transactions that fail due to technical declines, such as unavailability of systems or network issues with the bank or NPCI. 
 
Additionally, the ODR system would help customers track their funds when credit reversal dues are not cleared on time by banks. 
 
Typically, on UPI transfers enabled by third-party applications providers (TPAPs) such as Google Pay and PhonePe, the money flows through several intermediaries -- from the sender’s bank account to the settlement accounts of sponsor banks and then to the beneficiary account. 
 
In the current system, a customer has to manually raise a ticket with the TPAPs, which is then followed up with banks at the backend. The ODR is expected to expedite this process and reduce the turnaround time on failed transactions where credit reversals are not processed on time, according to an executive working on the pilot. 
While the tests are new, the concept of an ODR is not. 
 
Such a system has been discussed at the central bank level since last year at least. 
 
RBI governor Shaktikanta Das in August announced that NPCI would be launching such a system soon. 
 
The lack of a mechanism for UPI users to flag failed transactions was seen as a reputational risk for the adoption of UPI by several stakeholders of the channel, including the central bank, according to one person cited earlier in the story. 
 
UPI’s growth since July has been robust, clocking monthly record volumes consecutively. In September, the channel processed a record 1.8 billion transactions worth Rs 3.29 lakh crore. The monthly transactions are expected to cross 2 billion by the end of this year, as merchant segments in entertainment and travel gradually open when Covid-19 related restrictions ease.
 

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