Allahabad High Court seeks RBI, NPCI response on ‘accept/decline’ option for UPI payments
The Lucknow Bench has issued notices on a PIL seeking controls that would let recipients accept or reject incoming digital payments. Any eventual change could alter UPI checkout and settlement flows for merchants, particularly those exposed to mule-account-linked freezes.
What happened
Reserve Bank of India (RBI) · Allahabad High Court’s Lucknow Bench issued notices to RBI and NPCI on a PIL seeking an accept-or-decline feature for incoming
Key facts
- August 24, 2026
- Rs 200
- Rs 93.50 crore
- Rs 105
Why this matters
Prioritize partnerships or targets in fraud detection, payment orchestration, and merchant reconciliation, whose capabilities could become more valuable if UPI introduces recipient authorization controls.
What to watch
- RBI and NPCI affidavits or submissions defining technical feasibility, fraud rationale, and current safeguards.
- Any Allahabad High Court interim direction seeking pilots, status reports, or recipient-protection measures.
- NPCI circulars covering transaction finality, risk holds, beneficiary controls, or new UPI status codes.
- PSP-bank announcements of enhanced mule-account detection, beneficiary alerts, or inbound-payment risk screening.
- Rising reports of legitimate merchant accounts being frozen after receiving mule-linked payments, which could shift policy emphasis toward recipient protection.
- Map exposure to UPI payment reversals, freezes, and delayed settlement, especially for high-ticket, marketplace, resale, and cash-out-adjacent merchant categories.
- Prepare checkout and order-management logic for additional UPI states such as pending recipient action, rejected, expired, and risk-held.
- Ask acquiring banks, PSPs, and payment orchestration partners for their contingency plans on recipient-side authorization and mule-account controls.
- Review merchant terms, fulfilment release rules, refund workflows, and customer communications to ensure goods are not dispatched on non-final UPI status.
- Increase monitoring of suspicious inbound payment patterns and establish playbooks for account-freeze or law-enforcement information requests.