Bad news for cashback lovers: NPCI bans UPI transaction within same account from Aug 1 (2024)

July 23, 2018

To curb fake or artificialtransactions in order to get cashbacks, NPCI has taken a serious action anddecided to halt this practice on its payments platform UPI.

From August 1, payments transferwithin same account or UPI ID (where the payer and the payee account areactually the same) will be blocked by the umbrella organisation for all digitalpayments in India.

The payments regulator has issued acircular and strictly prohibiting those transactions from the aforementioneddate to avoid unnecessary load on the system.

The circular further added that NPCIhad asked payment service providers and banks to block such transactions attheir end.

NPCI also explained that thesetransactions are being done between same UPI accounts or in some case from theUPI ID to the account number, but the underlying account remains the same andthirdly by sending money to another UPI ID but connected to the same bank account.

At a time when digital paymentsplatformsare fighting to gain highest UPI share, the crackdown from thedigital payments watchdog will affect their number of transactions.

The prime reason behind theclampdown is to stop those customers who do multiple transactions within theiraccount to get cashback offers lured by UPI-led digital payments platforms suchas BHIM, Paytm, PhonePe, Mobikwik, Freecharge and others.

Additionally, this will reducefailure rates of payments on UPI platform due to low-value and repeatedtransactions.

Of late, cashbacks and incentiveshave been become a bone of contention for the aforementioned digital paymentsplayers. Some of them have even questioned each other strategy to lurecustomers and show a high number of transactions.

While Mobikwiktargeted government-run BHIMtooffer cashbacks only to their own customers or BHIM UPI-enabled bank apps,Flipkart-owned PhonePe hadearlier questionedPaytm’sUPI transaction numbers.

The move may discourage customerswho get cashbacks and incentives by doing multiple transactions directly orindirectly influenced by digital payments players but it will definitely helpthe government to control unnecessary transactions and false claims made bythese companies.

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