We are increasingly using less cash day by day. The absolute favourite Gen Z mode of payments is UPI. At most, we may use ATMs but bank visits are becoming rare events. Then what happens when any of your transaction fails but you account gets debited?
Do you still have to run from pillar to post to recover your money? Well, not at all needed. You only must follow up diligently with your bank and know the timelines. In this article, we will know the rules regarding customer rights in case you face such a situation while doing ATM Card, IMPS, UPI, AEPS or wallet payments or using NACH mandates.
What is a failed transaction?
A ‘failed transaction’ is a transaction that has not been fully completed due to any reason not attributable to the customer such as failure in communication link, non-availability of cash in an ATM, time-out of sessions, etc.
Failed transactions also include credits, which could not be effected to beneficiary account on account of lack of full information or lack of proper information and delay in initiating a reversal transaction.
Some terminologies and banking jargon
T is the day of transaction and refers to the calendar date.
R is the day on which the reversal is concluded and the funds are received by the issuer/originator/sender.
Although we are referring to the word “bank” here, the regulations apply to all the authorised RBI regulated non-bank entities as well.
The framework
Let us get to the RBI framework directly. Please refer to the below table.
Harmonisation of Turn Around Time (TAT) and customer compensation for
failed transactions using authorised Payment Systems
| Sl. no. | Description of the incident | Framework for auto-reversal and compensation | |
| Timeline for auto-reversal | Compensation payable | ||
| I | II | III | IV |
| 1 | Automated Teller Machines (ATMs) including Micro-ATMs | ||
| a | Customer’s account debited but cash not dispensed. | Pro-active reversal (R) of failed transaction within a maximum of T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days, to the credit of the account holder. |
| 2 | Card Transaction | ||
| a | Card to card transfer Card account debited but the beneficiary card account not credited. | Transaction to be reversed (R) latest within T + 1 day, if credit is not effected to the beneficiary account. | ₹ 100/- per day of delay beyond T + 1 day. |
| b | Point of Sale (PoS) (Card Present) including Cash at PoS Account debited but confirmation not received at merchant location i.e., charge-slip not generated. | Auto-reversal within T + 5 days. | ₹ 100/- per day of delay beyond T + 5 days. |
| c | Card Not Present (CNP) (e-commerce) Account debited but confirmation not received at merchant’s system. | ||
| 3 | Immediate Payment System (IMPS) | ||
| a | Account debited but the beneficiary account is not credited. | If unable to credit to beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 4 | Unified Payments Interface (UPI) | ||
| a | Account debited but the beneficiary account is not credited (transfer of funds). | If unable to credit the beneficiary account, auto reversal (R) by the Beneficiary bank latest on T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| b | Account debited but transaction confirmation not received at merchant location (payment to merchant). | Auto-reversal within T + 5 days. | ₹100/- per day if delay is beyond T + 5 days. |
| 5 | Aadhaar Enabled Payment System (including Aadhaar Pay) | ||
| a | Account debited but transaction confirmation not received at merchant location. | Acquirer to initiate “Credit Adjustment” within T + 5 days. | ₹100/- per day if delay is beyond T + 5 days. |
| b | Account debited but beneficiary account not credited. | ||
| 6 | Aadhaar Payment Bridge System (APBS) | ||
| a | Delay in crediting beneficiary’s account. | Beneficiary bank to reverse the transaction within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| 7 | National Automated Clearing House (NACH) | ||
| a | Delay in crediting beneficiary’s account or reversal of amount. | Beneficiary bank to reverse the uncredited transaction within T + 1 day. | ₹100/- per day if delay is beyond T + 1 day. |
| b | Account debited despite revocation of debit mandate with the bank by the customer. | Customer’s bank will be responsible for such debit. Resolution to be completed within T + 1 day. | |
| 8 | Prepaid Payment Instruments (PPIs) – Cards / Wallets | ||
| a | Off-Us transaction The transaction will ride on UPI, card network, IMPS, etc., as the case may be. The TAT and compensation rule of respective system shall apply. | ||
| b | On-Us transaction Beneficiary’s PPI not credited. PPI debited but transaction confirmation not received at merchant location. | Reversal effected in Remitter’s account within T + 1 day. | ₹100/- per day if delay is be |
Illustrative example: A failed transaction
Suppose I am doing a simple IMPS transaction through my internet banking facility of ABC bank. Beneficiary is my landlord, who holds account with XYZ bank. I am sending Rs 45,000 towards rent on 1st March 2024.
Next, I initiated the transaction. There was some tech/server error on my bank’s part. Hence, my money got deducted from my account but never reached my landlord’s account. This is a classic case of a failed transaction.
Please refer to the table row 3a above. As per the RBI directive, ABC bank should reverse this failed transaction within T+1 day. This means, ideally I should get my money back in my account by 2nd March.
The recourse
If this does not happen,
- I should approach my bank’s customer care team/branch official via written communication.
- Remember, do NOT keep this conversation verbal. Make sure you keep a written record.
- But suppose the ABC bank fails to respond. After several reminders from your side, the bank finally reverses the transaction on 7th March.
- Because there is 5 days delay beyond the timeline, you must get compensation at the rate of Rs 100 per day. (or Rs 500 in this case)
- The ABC bank will have to credit Rs 45,500 back to your account in such a case on 7th March.
Moreover, if the bank fails to adhere to these rules, you can always escalate the matter to the bank’s internal ombudsman first and to the RBI ombudsman in case you do not get your due.
Final take
As our life gets increasingly digital, it is crucial to know the rules of the game. Know your rights and stick to the timelines to have tension free financial life.
P.S. The framework is applicable to domestic payments only.
Disclaimer: The above content is for informational and educational purposes only. Not advice.
