New UPI Rules: No Payment Will Go to the Wrong Person, Even by Mistake

 

Starting June 30, India's digital payment ecosystem will undergo a major upgrade aimed at preventing fraudulent or mistaken UPI transactions. Now, even if a user enters incorrect details, the Unified Payments Interface (UPI) will not process the payment unless the recipient's verified name is matched and confirmed.

 

This initiative, led by the National Payments Corporation of India (NPCI) under the "UPI Third-Party App Provider Compliance Policy," will apply to all UPI-enabled banks and apps.

 

Key Highlights:

• From June 16, UPI systems must begin verifying and displaying the recipient’s name with clarity before any payment is processed.
• From June 30, UPI apps and banks must strictly follow the new verification protocol.
• The sender will now be shown the verified name of the beneficiary before proceeding with the transaction.
• If the name shown is unexpected or unclear, the transaction can be aborted on the spot.
• Alias-based naming, often used in scams, will no longer be accepted as sufficient for identification.

This means users will have a second chance to confirm the payee’s identity before the amount is transferred—adding a critical security layer against common UPI frauds and misdirected transactions.

The Reserve Bank of India (RBI) and NPCI are working closely with banks to ensure all UPI apps like PhonePe, Google Pay, Paytm, and BHIM implement this across their platforms without delay.

Additionally, the refund mechanism for failed UPI transactions is being overhauled. Payment reversals will now be automated and time-bound, with tighter protocols to reduce customer grievances.