Failed Transactions Penalties for UPI, ATMs Introduced

In one of the most recent developments and what comes as a good news to customers and general public, RBI has introduced penalties to Banks and Financial Institutions for failed transactions such as UPI, ATM etc.

The Reserve Bank of India, in a step to ensure that customers are compensated in case it takes too long to address failed transactions on UPI, payments banks and wallets, Aadhaar Enabled Payments System, among others, introduces penalties. The central bank reportedly released a framework for this on September 20, which will come into effect on October 15, 2019. This comes as a good news to all general public and customers.

New RBI Framework for Faster Redressal of Failed Transactions

RBI stated that “a large number of customer complaints emanate on account of unsuccessful or failed transactions”. Under the new framework, RBI has set up auto reversal timelines for failed transactions that’ll have to be adhered to even if a customer doesn’t register a complaint. There have been no mechanisms for consumer grievance redressal for failed transactions uptill now. Customers had to suffer and wait for 5-6 days for reversal of failed transactions.

Failed transactions penalties introduced by RBI

How this Compensation Will Work

For UPI Transactions: 

If the user’s account is debited but the beneficiary’s account is not credited, the beneficiary bank should auto-reverse the money within 1 day. The compensation payable in this case is Rs 100 per day of delay after the first day.

And if a customer’s account is debited but the UPI transaction confirmation is not received at the merchant’s end, the timeline for auto-reversal is within 5 days of the transaction. The compensation payable in this case is Rs 100 per day of delay after the fifth day.

ATM transactions:

RBI has also mandated a “pro-active” reversal of the failed transaction within 5 days of the transaction. Failing this, the user will receive a compensation of Rs 100 per day after the fifth day of the initial transaction.

Card to Card transactions:

If a card to card transaction fails, the transaction amount has to be refunded within 1 day. If that doesn’t happen, the user will receive a compensation of Rs 100 per day till she/he receives the transaction amount.

Point of Sales (PoS):

In the case of transactions at PoS (Card Present), including cash at PoS, as well as Card Not Present (e-commerce), if the account is debited but confirmation is not received at merchant location, the timeline for auto-reversal of the failed transaction and compensation payable is the same as for failed transactions at ATMs.

Conclusion

In all honesty, this initiative by the Central Bank is welcome by all especially the general public who are facing difficulties for the delay in reversal of failed transactions. Imagine having to pay twice for the goods you are supposed to purchase because of failed transaction. As of now, nothing can be done much except to wait for the banks to reverse your failed transactions. The amount does however get credited to customer’s account within 5-6 working days.

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