The National Payments Corporation of India (NPCI), on October 14, 2026, issued UPI Process for Resolution of MCC Misclassification-Related Disputes, has introduced a structured mechanism for resolving disputes concerning incorrect Merchant Category Code (MCC) classification and the resulting differential interchange fees. The framework applies to domestic UPI transactions for which interchange fees are applicable, excluding RuPay Credit Card on UPI transactions. It is intended to improve classification accuracy, transparency and accountability among UPI ecosystem participants.
Under the process, a Remitter Bank or Payee Payment Service Provider (PSP)/Acquirer may raise a claim against the other party. Claims generally must involve transactions processed and settled within the preceding 90 calendar days, with a minimum aggregate claim amount of ₹10 lakh, calculated separately for each Acquirer and Remitter Bank combination. The process includes pre-compliance filing, response, compliance filing following rejection, and referral to a Panel for Resolution of Disputes (PRD). The responding party generally has 23 calendar days to respond at the pre-compliance stage, with a seven-day grace period; subsequent compliance and escalation stages have prescribed 15-calendar-day timelines. The PRD aims to resolve claims within 90 calendar days of the Panel Reference Date, and its decision is final and binding for NPCI settlement and adjustment purposes, without prejudice to appeal rights under applicable law.
The framework also prescribes supporting-documentation requirements, claim fees and corrective action. A claim raised at the compliance stage attracts a fee of ₹3,000 plus applicable taxes for the party that accepts or withdraws the claim, while a PRD review fee of ₹3,000 plus applicable taxes is charged to the non-prevailing party. Certain transactions, including on-us transactions, transactions already reversed or adjusted, and matters unrelated to MCC misclassification, are excluded. Where incorrect classification is established, the Payee PSP/Acquirer must adjust the differential interchange fee and correct the MCC assignment prospectively. The circular states that the framework takes effect from the date of its issuance.
[Circular No. 239]
