The process you link to is Indian bureaucracy at its finest. It also focuses on disputes surrounding UPI payments, ie “I paid via UPI and the money didn’t arrive”. Look at the categories of disputes on that page. The “fraudulent transaction” is extremely narrowly scoped to fraudulent use of your UPI account.
But by “dispute resolution”, most people in payments mean commercial disputes — “I paid for a chicken, you sent me an egg” type disputes. Or didn’t send anything at all.
That’s hard to deal with in UPI, last I checked. But I could be wrong! But then — why do all these UPI disputes and scams keep cropping up in newspapers and social media?
Another scenario is dealing with a fraudulent withdrawal (no matter how it happens) by getting a refund with one phone call. The driver for this is that under most consumer-friendly legal systems, the customer gets a near-immediate refund for any unauthorised withdrawal. UPI => no. It’s damned difficult.
To be clear, this isn’t a problem with UPI as a piece of code, UPI moves money from A to B cheaply and quickly. Great. But the governance that is wrapped around it has serious consumer protection problems.
The problems (eg dispute resolution) will be an interesting one to resolve. Despite the bold “not true <link>” parent comment, disputes in UPI are currently a headache. And part of the reason is the narrow scope NPCI can act in.
1. In scenarios where UPI is replacing a cash transaction e.g., purchasing fruits from a fruit vendor on the street (just did it a few hours ago), the transaction is immediate. Disputes are settled exactly as how it would be done with a cash transaction i.e., discuss and settle with the vendor in situ.
India had a separate settlement mechanism called Cash-On-Delivery that was needed for companies like Amazon/FlipKart etc., to penetrate the ecommerce space before UPI came into being. Even Amazon does returns and refunds through their online/app-based customer service process.
2. In scenarios where UPI is replacing a credit card e.g., I order food through a food delivery app and an item is missing. The food delivery app provides a customer service option where they are able to resolve the issue (they could a. deliver the missing item at no charge, b. give me a cash coupon for the inconvenience that I can use on their app, c. refuse to resolve the issue). I haven't had a scenario where the service provider has refused to resolve the issue.
3. As far as fraud is concerned, a couple of months ago the local police visited our apartment complex for a brief meeting to educate people on frauds and safety. They focused on digital crimes and told us about the national helpline for cybercrime. [1] Residents can dial 1930 to reach the national cybercrime helpline to report crimes, including online frauds -- this also includes the QR code scams that you hear about in the media. They register the complaint and guide you with the process for recovering lost funds. I haven't done this myself, but what the officer explained is that based on the transaction details, the national cybercrime control center coordinates with the participating banks on both sides of the transaction to immediately freeze funds. You can also take the complaint number to the nearest police station and get an FIR (First Information Report) filed to get the fraudsters criminally prosecuted.
4. In scenarios involving a buyer-seller dispute, there is the consumer protection laws where the consumer can directly file suit against the provider in a consumer court. These are special courts (separate from the civil and criminal courts) and are very effective in protecting consumer rights. This works for all types of consumer disputes about service/product issues.
This would be the last resort for protecting consumer rights even in cases where a credit card company declines to handle a consumer's complaint on technicalities and is not just for UPI. These courts are at the district level in all states. [2]
People in the west and other developed countries have a lot more of their digital transactions occuring on credit/debit cards and are comparing that with UPI. While what UPI is doing overlaps with a lot of that, it also is more than that in enabling micropayments and p2p payments. So, that is of value for the average Indian resident.
I don’t dispute most of what you say. I’ll only say that you’re a little optimistic re (3) and (4).
Speak to regular (not well connected) people who’ve been through the justice system. It’s not pretty.
But then maybe you’re lucky enough to live in a state with super responsive police and courts. After all, a lot of this stuff is a state subject and can vary by state.
But the stories of hellish experiences seem to come from all around the country.
I agree with your statement above. UPI is looking at also getting credit card accounts linked to the NPCI/UPI network in the future. NPCI itself is trying to push RuPay as an alternative to Visa/Mastercard for domestic card payments.
So, a subtle difference from a payment stack perspective is that the consumer protection offered by credit cards is not necessarily a payment stack functionality but a feature of the credit card (just as credit and loyalty points etc., are a function of the credit card).
It is just a slighly different design goal and honestly most users of UPI are okay with it because they favor the cash-replacement offered by UPI.
I will say this though -- the ease of use in UPI is so smooth that if users fail to double check the QR code they have scanned (actually the UPI virtual address) with the vendor and confirm that it is indeed their account (I do it every time), there is a possibility of hackers diverting the funds at the point-of-sale through the use of fake QR codes. This risk is similar to skimming devices installed on PoS machines/ATM machines to steal credit card data.
But by “dispute resolution”, most people in payments mean commercial disputes — “I paid for a chicken, you sent me an egg” type disputes. Or didn’t send anything at all.
That’s hard to deal with in UPI, last I checked. But I could be wrong! But then — why do all these UPI disputes and scams keep cropping up in newspapers and social media?
Another scenario is dealing with a fraudulent withdrawal (no matter how it happens) by getting a refund with one phone call. The driver for this is that under most consumer-friendly legal systems, the customer gets a near-immediate refund for any unauthorised withdrawal. UPI => no. It’s damned difficult.
To be clear, this isn’t a problem with UPI as a piece of code, UPI moves money from A to B cheaply and quickly. Great. But the governance that is wrapped around it has serious consumer protection problems.
The problems (eg dispute resolution) will be an interesting one to resolve. Despite the bold “not true <link>” parent comment, disputes in UPI are currently a headache. And part of the reason is the narrow scope NPCI can act in.