NPCI Mandates Alphanumeric Transaction IDs for UPI Apps Starting February 2025

 

NPCI Mandates Alphanumeric Transaction IDs for UPI Apps Starting February 2025

Starting February 1, 2025, no UPI payment application will be allowed to use special characters when generating transaction IDs. If you're using an app that includes special characters in the transaction ID, your transaction will be rejected by the central system. The National Payments Corporation of India (NPCI) aims to standardize the process of generating UPI transaction IDs, instructing all players in the payment ecosystem to use only alphanumeric characters and avoid special symbols. Experts we spoke to noted that while this directive primarily targets business users, it will also affect consumers who use UPI apps for transactions.

This directive from NPCI will be effective starting February 1, 2025. From that date, if you are using a UPI app that doesn't comply with this rule, you will not be able to make transactions using the Unified Payment Interface (UPI).

UPI transactions on certain apps will cease to function starting February 1, 2025. NPCI has clearly informed UPI operators that they must switch to using alphanumeric characters for UPI transaction IDs, or the central system will block transactions from non-compliant apps. The responsibility for ensuring compliance with this directive lies with the payment app providers.

As per a UPI circular dated January 9, 2025, reference is made to an earlier directive (OC 193, March 28, 2024), which advised UPI ecosystem participants to use only alphanumeric characters for generating UPI transaction IDs to align with UPI technical specifications. While efforts have been made to improve compliance and the issue has largely been addressed, it has been observed that some participants remain non-compliant. Given the importance of adhering to these specifications, the decision has been made to prohibit the use of special characters in UPI transaction IDs. Any transaction with an ID containing special characters will be rejected by the central system, starting from February 1, 2025.

UPI apps that do not comply with NPCI's directive will be unable to process transactions, according to multiple experts speaking to ET Wealth Online.

Mohan K, Founder of TechFini, explained, "UPI transactions with special characters in their transaction IDs will be rejected by the central system. Only those with alphanumeric transaction IDs will be successfully processed. This step is intended to improve system efficiency, address potential security risks, and ensure consistency across UPI transactions."

Alok Singh, Executive VP - Digital Business at Ongo (the digital payments platform of AGS Transact), mentioned, "Most major payment ecosystem players have already complied with NPCI's directive to use 35-digit alphanumeric characters for UPI transaction IDs. However, some PSPs remain non-compliant. Consumers using any PSPs that haven't met this requirement by February 1, 2025, will not be able to transact via UPI through those providers."

Rahul Jain, CFO at NTT DATA Payment Services India, supports Singh's view, stating, "This move is crucial for bringing uniformity to daily UPI operations and furthering technical standardization. NPCI has provided enough time for industry players to adapt and meet the UPI technical standards. Transactions with special characters will be declined by the central system if the rules aren't followed. Given the industry’s preparedness, most players have already ensured full compliance by the deadline to avoid disruptions, and those who haven't will implement the changes soon."

NPCI issued additional directions regarding UPI in a circular dated March 28, 2024, addressing several compliance issues related to UPI technical specifications, specifically regarding the transaction ID (TXNID).

Issue 1: Length of Transaction ID
According to UPI technical specifications, the transaction ID (TXNID) must be exactly 35 alphanumeric digits. However, an analysis of the data revealed the following anomalies:

• Inconsistent Length of Transaction IDs: PSPs (Payment Service Providers) are not adhering to the required length, with transaction IDs ranging from 4 digits to 35 digits, which is not in line with the UPI technical specifications.

• Duplicate Transaction IDs: Some PSPs have been using duplicate transaction IDs when originating transactions, which violates the UPI guidelines.

NPCI's Directive on Transaction IDs:

1. Length of Transaction IDs:
   To ensure standardization, NPCI mandates that all participating entities must use transaction IDs with exactly 35 alphanumeric characters. The central system will validate the field length, and any transaction with a transaction ID that does not comply with this specification will be rejected, with an appropriate reason provided.

2. Duplicate Transaction IDs:
   There is already validation in place to reject duplicate transaction IDs, but this has led to significant customer dissatisfaction. In certain exceptional cases, where multiple databases are involved in the central system, some transactions with duplicate IDs are processed online but later rejected in the back office, leading to settlement issues.

NPCI's Directive on Duplicate Transactions:
In cases where duplicate transactions are processed by the central system and result in settlement issues, the liability for these discrepancies will be shifted to the defaulting PSP (Payment Service Provider). The originating entity will be debited, as using duplicate transaction IDs violates the technical specifications.

In scenarios where banks have successful transactions in their internal systems, but these transactions are missing from the raw file provided, the following actions should be taken:

• Remitting banks should not reverse the funds back to the customer’s account.
• Beneficiary banks should hold the funds in the beneficiary account.
• Such cases should be reported to NPCI immediately for further action.

Alok Singh from Ongo (AGS Transact’s digital payments platform) explains, “The main advantage of mandating a 35-digit alphanumeric transaction ID is that it creates a standardized format, making it easier to trace unique transactions. Currently, there are numerous UPI apps, each with their own systems for generating transaction IDs, which complicates the process of tracking transactions. When a customer complains and quotes a transaction ID, it’s often difficult to trace the transaction and requires information from multiple sources. Standardizing the transaction ID will make it easier to identify crucial details such as the PSP, remitter, transaction date, and more.”