UPI Transactions Declined? New NPCI Rule to Take Effect from February 1, 2025
Key Highlights
From February 1, 2025, certain UPI transactions may not be processed if the payment application used does not comply with updated guidelines set by the National Payments Corporation of India (NPCI). The organization has mandated that transaction IDs must exclusively contain alphanumeric characters, prohibiting the use of special symbols. Any UPI transaction initiated with an ID containing special characters will be declined by the central system. This directive aims to standardize transaction ID formats across the UPI ecosystem to enhance security and consistency.
UPI Transactions on Some Apps May Stop Working from February 1, 2025
The NPCI has instructed all UPI service providers to ensure their systems generate transaction IDs using only alphanumeric characters. If a payment application fails to comply with this requirement, transactions from that app will not be processed. The responsibility for adhering to this guideline lies with the respective payment service provider (PSP).
A circular issued on January 9, 2025, reiterates an earlier directive from March 28, 2024 (OC 193), which initially advised UPI service providers to adopt alphanumeric transaction IDs. While many participants have adjusted their systems accordingly, some non-compliant providers remain. To address this, NPCI has now enforced a stricter approach, stating that any transaction ID containing special characters will be automatically rejected from February 1, 2025.
Additional NPCI Directives on UPI Compliance: NPCI has also provided further clarifications on UPI technical compliance, particularly regarding transaction ID specifications.
Transaction ID Length Compliance
As per UPI standards, transaction IDs (TXNID) must be exactly 35 characters long and use only alphanumeric characters.
Currently, discrepancies exist in the length of transaction IDs, ranging between 4 and 35 characters, which is inconsistent with UPI specifications.
To ensure uniformity, all participating entities must adopt the standardized 35-character transaction ID format.
Any transaction with a non-compliant transaction ID length will be rejected by the central system.
Duplicate Transaction IDs
While validation mechanisms exist to prevent duplicate transaction IDs, some instances still occur, causing operational challenges and customer dissatisfaction.
In rare cases where multiple databases are involved, some duplicate transactions may be processed, leading to settlement issues.
To resolve this, NPCI has mandated that liability for such duplicate transactions will fall on the originating PSP, and the defaulting entity will bear the financial impact.
If a bank identifies successful transactions in its internal system that do not appear in the raw data file, the remitting bank must not reverse the funds. Instead, the beneficiary bank should hold the funds in the recipient’s account until NPCI provides further instructions.
Conclusion
With these updates, UPI service providers must ensure that their systems are compliant by February 1, 2025, to avoid transaction failures. Users are advised to verify whether their chosen UPI apps follow the updated guidelines to prevent payment disruptions. NPCI’s initiative aims to enhance the security and efficiency of digital transactions, ensuring seamless and standardized operations across all platforms.
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